Management of Facility Commodity Contracts:

A Model for the Furniture Services Industry

by

Jake Smithwick

A Thesis Presented in Partial Fulfillment

of the Requirements for the Degree
Master of Science

Approved March 2012 by the

Graduate Supervisory Committee:

Kenneth Sullivan, Chair

Dean Kashiwagi
William Badger

ARIZONA STATE UNIVERSITY

May 2012
 UMI Number: 1508477

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 ABSTRACT

Commodity contracts are often awarded on the basis of price. A

price-based methodology for making such awards fails to consider the

suppliers’ ability to minimize the risk of non-performance in terms of cost,

schedule, or customer satisfaction. Literature suggests that nearly all risk

in the delivery of commodities is in the interfacing of nodes within a supply

chain. Therefore, commodity suppliers should be selected on the basis of

their past performance, ability to identify and minimize risk, and capacity to

preplan the delivery of services. Organizations that select commodity

suppliers primarily on the basis of price may experience customer

dissatisfaction, delayed services, low product quality, or some combination

thereof.

One area that is often considered a “commodity” is the delivery of

furniture services. Arizona State University, on behalf of the Arizona Tri-

University Furniture Consortium, approached the researcher and identified

concerns with their current furnishing services contract. These concerns

included misaligned customer expectations, minimal furniture supplier

upfront involvement on large capital construction projects, and

manufacturer design expertise was not being utilized during project

preplanning. The Universities implemented a best value selection process

and risk management structure. The system has resulted in a 9.3 / 10

customer satisfaction rating (24 percent increase over the previous

system), for over 1,100 furniture projects totaling $19.3M.

i
 ACKNOWLEDGMENTS

I wish to express a tremendous amount of gratitude and

appreciation to my Graduate Supervisory Committee: Dr. Kashiwagi, Dr.

Badger, and my chair, Dr. Sullivan. Professor Sullivan’s guidance,

expertise, mentorship, and support has been exemplary; I am very

humbled to have had such an incredible opportunity to work with him.

I also thank the staff at the Performance Based Studies Research

Group for their continued support and firsthand experience.

Finally, I am forever grateful for the encouragement, love, and

support of my beautiful wife, Mallorie. She has unselfishly and

wholeheartedly supported me these past several years, in so many ways.

ii
 TABLE OF CONTENTS

Page

LIST OF TABLES ......................................................................................... vi

LIST OF FIGURES ...................................................................................... viii

CHAPTER

1 INTRODUCTION ....................................................................... 1

Overview .................................................................................. 1

Problem Statement .................................................................. 1

Hypothesis ............................................................................... 6

Research Objectives ............................................................... 7

Research Scope ...................................................................... 7

Research Methodology Summary ......................................... 10

Summary of Thesis................................................................ 11

2 LITERATURE REVIEW ............................................................ 13

Summary of Findings............................................................. 13

Introduction ............................................................................ 14

Issues Typically Encountered Within Bureaucracies ............ 17

Identify how Facility Managers Identify, Manage, and

Minimize Risk......................................................................... 26

Risk Measurement of Commodity Services .......................... 34

Summary and Conclusion ..................................................... 42

3 RESEARCH METHODOLOGY ................................................ 44

Introduction ............................................................................ 44

iii
CHAPTER Page

Phase One: Project Scoping and Current Conditions ........... 45

Phase Two: Vendor Selection and Contract Award .............. 49

Structure of the PIPS RFP and Evaluation Criteria ............... 52

Past Performance Information............................................... 53

Project Capability and Financial Proposal Submittals ........... 55

Interviews............................................................................... 63

Prioritization ........................................................................... 65

Pre-Award Phase .................................................................. 66

Phase Three: Risk Management Structure ........................... 68

Best Value Information System ............................................. 71

Summary ............................................................................... 73

4 DATA COLLECTION ................................................................ 75

Introduction ............................................................................ 75

Furniture Industry Vendor Survey ......................................... 75

University Buyer Satisfaction Survey .................................... 77

Selection Phase Results........................................................ 80

Project Performance Information........................................... 92

5 DATA ANALYSIS ...................................................................... 96

Introduction ............................................................................ 96

Furniture Industry Perceptions of Best Value........................ 96

University Buyer Satisfaction Survey .................................. 100

Selection Phase Results...................................................... 108

iv
CHAPTER Page

Project Performance Information......................................... 117

6 RESULTS................................................................................ 120

Introduction .......................................................................... 120

More Efficient Procurement Model for Facility Managers ... 121

Impact of a Value-based Leadership and Risk Management

Structure .............................................................................. 125

Limitations............................................................................ 131

7 CONCLUSION ........................................................................ 133

Summary ............................................................................. 133

Research Benefits ............................................................... 137

Recommendations for Future Research ............................. 138

Conclusion ........................................................................... 139

REFERENCES ......................................................................................... 141

APPENDIX

A FURNITURE INDUSTRY SURVEY ..................................... 149

B INITIAL BUYER SURVEY .................................................... 152

C PAST PERFORMANCE INFORMATION SURVEY ............ 155

D TRI-U FURNITURE CONTRACT, RFP NO. 080909 ........... 157

E RFP 080909 ADDENDUM AND CLARIFICATION .............. 256

F BEST VALUE INTERVIEW QUESTIONS ............................ 263

G EVALUATION COMMITTEE TRAINING SLIDES .............. 268

H EVALUATOR RATING FORMS ......................................... 272

v
 LIST OF TABLES

Table Page

1.1 Geographic Comparison of University Locations ................... 8

2.1 Facility Management Outsourced Functions ........................ 33

3.1 Schedule of Research Methodology Execution ................... 45

3.2 Evaluation Criteria from State of AZ, ASU Traditional, and

Best Value RFPs ................................................................... 50

3.3 Project Type Definitions ....................................................... 52

3.4 Risk Management Tools ....................................................... 68

4.1 Furniture Industry Perceptions of Best Value ...................... 76

4.2 University Buyer Satisfaction Survey ................................... 79

4.3 Summary of University Performance Differential ................. 80

4.4 Initial Financial Evaluation – Primary Award ........................ 83

4.5 Initial Financial Evaluation – Budget Award ......................... 84

4.6 Summary of All Proposers' Risk Categories ........................ 85

4.7 Primary Award Evaluation, Raw Data .................................. 87

4.8 Budget Award Evaluation, Raw Data ................................... 88

4.9 Financial Proposal Clarification (Low-End) –

Primary Award ....................................................................... 90

4.10 Financial Proposal Clarification (Low-End) –

Budget Award ........................................................................ 90

4.11 Primary Award Evaluation, Comparisons of Raw Data ..... 91

4.12 Budget Award Evaluation, Comparisons of Raw Data ...... 92

vi
Table Page

4.13 Summary of Delivery Volume by Dealer ............................ 94

4.14 Project Schedule Deviation Summary ............................... 94

4.15 Project Cost Deviation Summary ....................................... 95

5.1 T-Test of Furniture Industry Perceptions of Best Value ....... 98

5.2 Selected Furniture Industry Survey Vendor Comments .... 100

5.3 ANOVA ASU, NAU, UA Initial Buyer Survey Responses .. 102

5.4 T-test of ASU,UA and NAU, Initial Buyer Survey ............... 103

5.5 ANOVA of ASU, NAU, UA, PIPS Buyer Survey ................ 104

5.6 T-test of ASU,UA and NAU Buyer Responses, Best Value

System ................................................................................. 105

5.7 T-Test of ASU Buyer Responses ....................................... 106

5.8 T-Test of NAU Buyer Responses ....................................... 106

5.9 T-Test of UA Buyer Responses ......................................... 107

5.10 T-Test of Initial and Best Value Buyer Responses .......... 108

5.11 Initial Financial Evaluation Summary ............................... 109

5.12 Proposers’ Total Score from Initial Evaluation ................. 112

5.13 Primary Award Evaluation, Point Differential from Firm F 113

5.14 Budget Award Evaluation, Comparisons of Raw Data .... 114

5.15 Primary Award Evaluation, ∆ from Best Score ................. 115

5.16 Budget Award Evaluation, ∆ from Best Score .................. 116

5.17 Summary of Relative Delivery Volume by Dealer ............ 117

5.18 Schedule Deviation Differential (from Firm F) ................. 118

vii
 LIST OF FIGURES

Figure Page

3.1 Previous Tri-University Furniture Purchasing Process ........ 49

3.2 Executive Workstation Cost Template ................................. 61

3.3 Professional Workstation Cost Template ............................. 62

3.4 Best Value Furniture Services Purchasing Structure ........... 70

3.5 Best Value Information System ............................................ 73

viii
 Chapter 1

INTRODUCTION

Overview

The objective of this thesis was to address the unrealized

efficiencies buyer organizations can achieve by using a structured

approach to identify and minimize risk. An area of significant potential

improvement is in the selection and delivery of services that are perceived

to be a commodity. Because commodities have minimal distinguishing

characteristics, price is used as the deciding factor for which product or

service to purchase (Rayburn, 2010; Reimann, Schilke, & Thomas, 2010;

Rushkoff, 2005). When a buyer incorrectly assumes that price alone is a

sufficient data point to make a decision, they expose their organization to

risk that could have otherwise been minimized by considering additional

factors besides cost alone (Gransberg, 1996; Kashiwagi & Savicky, 2003);

the researcher defines this buyer behavior as exhibiting a “commodity

mentality.”

Problem Statement

One of the core groups within a large organization is a purchasing

department, and part of their responsibility is to acquire commodity

services and materials (Writing, n.d.). The researcher has observed that

organizations may fail to identify and minimize risk from commodity

services. This would be evidenced by increased levels of dissatisfaction

from customers, lack of measurements that drive accountability,

1
customers not receiving what was expected, and surprises or risks that

cause delays or cost increases. The nature of a large bureaucratic

organization may foster “commodity mentalities” towards the entire supply

chain that delivers goods and services which are (incorrectly) perceived to

be “commodity.”

The researcher proposes that certain behaviors and characteristics

are indicative of when an organization, or its agents, has a commodity

mentality. One characteristic is that they use price as the primary

differentiating factor when selecting a supplier. Certainly, they may

consider other factors when evaluating a supplier, but the primary

decision-making differentiator is cost. A prime example of the

manifestation of a price-based mentality is the use of computerized

auctioning systems, where competitors methodologically lower their price

for a given service until they can go no lower (Gentille, 2004; Kuty, 2004).

If one assumes that a resource is commodity and arbitrarily applies these

assumptions to the rest of its supply chain (Katz, 2003), it therefore follows

that a buyer may perceive there is limited risk in successfully delivering

the good to the buyer. A second trait of organizations exhibiting a

“commodity mentality” is the absence of measurements that drive

accountability. These measurements, when they are used, track critical

performance metrics of not only the supplier or the product they deliver,

but also of the buyer’s organization. If a buyer organization assumed that

price was the only important differentiating factor, they would therefore not

2
need a performance measurement system in place (because they assume

there is no risk).

This “low-price” focus exists with government bureaucracies in their

attempt to use a selection process that is fair and can be defended against

protests (Gransberg, 1996). The reader must understand the inner

workings of bureaucracies to know why this behavior is so prevalent.

Bureaucracy is a structured entity whose members have specialized

functions that collectively carry out the organization’s mission

(Bureaucracy, n.d.). A bureaucratic configuration is the most efficient way

to achieve results in large organizations, and is especially applicable in

Facility Management departments (Cotts, 2010). However, this structure

comes at a cost: effective communication decreases, change is slow (if

not impossible) to implement, and overall performance can decrease (Dell,

2005; Drucker, 2002; Raina, 2010;). Commodity mentalities can therefore

be prevalent within bureaucracies (Kashiwagi, 2002; Semon, 2004).

Many times, when people hear the term ‘bureaucracy’, they make

one of several assumptions (Toye, 2006):

• bureaucrats are only accountable to their supervisors

• bad bureaucracy is monopolistic in nature and is inefficient in

delivering goods and services

• private interests can dissolve the regulatory responsibility of the

bureaucracy

3
 • rules developed by the bureaucracy are sweeping and can be

enforced without regard to its original intent

• bad bureaucracy has multiplicity of departments and points-of-

contact, which creates confusion and inefficiencies

Large organizations inherently face increased difficulties in

maintaining high levels of efficiency; that is, to create the greatest impact

with the least amount of resources (Efficient, n.d.; Snyder & Morris, 1984).

A Facilities Management department has established rules, a defined

chain-of-command, and many of its members have specialized functions

(EN15221 – EuroFM, 2011; Payant & Lewis, 2007). Therefore, it follows

that FM groups are also be susceptible to the negative characteristics of

bureaucracy, and sometimes lack effective communication tools (den

Otter & Emmitt, 2007).

For example, in the late 1980s, the Pentagon pushed for changes

to their procurement practices (Pasztor, 1989). In particular, officials

wanted to reduce the work force size, increase the quality of products

delivered under the acquisition system, and become more efficient at

procuring prototype technology. Members of Congress and the Secretary

of Defense identified that change was very slow, and may be altogether

impossible to implement. The Pentagon has 100,000 purchasing agents

who procure over $300B annually. The reader can therefore infer that the

Pentagon is hampered by its bureaucratic structure, due to its incredible

size and level of hierarchical complexity.

4
 Another way to imagine bureaucracy is an illustrative concept of

silos. Functional silos exist are when departments and groups have a

specific function or specialty, and as a result, the silos tend to focus on

achieving their own results (Armajani, 2010; Dell, 2005). Recall that one

characteristic of bureaucracy is a highly task-centric structure, where

individuals are assigned specific roles and duties. So in essence, the

nature of a bureaucratic organization leads to the creation of silos that are

primarily focused on their own work and achievements.

The concept of organizational silos can also be extended to the

supply chain. Individual nodes along the supply chain that are operating

in silos would not consider the profitability, efficiency, and interoperability

of their value-adding functions as it relates to the rest of value chain

(Blount, 2008; Katunzi, 2011; Milligan, 1999). Kashiwagi (2012) suggests

that organizational silos create the following environment:

• Silo builders take a more detailed view that is very short sighted,

and restrict people to their own silo. They think only in their own

best interest.

• Individuals within silos create their own terminology, more

details, more rules, and more decision making.

• “Us” against “them” attitudes are prevalent.

• Non-transparency exists.

• Effort is minimized internally, and maximized externally.

5
 In an effort to meet their own performance goals, silos may use

lower-cost suppliers, ignore the needs of the final end customer, and

assign inadequate resources to new products and service design (Katunzi,

2010). Therefore, the nature of a large bureaucratic organization may

foster “commodity mentalities” towards the entire supply chain that

delivers goods and services which are (incorrectly) perceived to be

“commodity.”

Hypothesis

The purpose of this research was to test the applicability of a value-

based risk management system in services which are typically viewed to

have limited and quantifiable differences, with exception to price

(commodities). The first hypothesis was that while a service may

generally be perceived as a commodity, there are actually differing levels

of service performance between suppliers. Performance is defined in

terms of cost deviation, schedule deviation, and customer satisfaction.

The second hypothesis was that implementing a best value

business and leadership structure at the final buyer’s position in the supply

chain will increase upstream performance, and thereby result in increased

performance at the buyer’s site.

The third hypothesis was that implementing a structured pre-

planning, risk identification, and risk management system will stabilize

overall system performance in the buyer’s organization.

6
Research Objectives

There were two primary research objectives for this thesis. The

first was to identify a more efficient methodology for procuring commodity

services. The new approach requires less effort, decision making, and

technical expertise of the buyer organization, and instead allows them to

select commodity services on the basis of the providers’ ability to identify

and manage risk in delivering their service.

The second objective was to implement a Best Value business

leadership and risk management structure for a service that is typically

perceived as a commodity. The researcher proposed that organizations

need a “cradle to grave” approach that allows service providers to identify

and manage the risk that they do not control. Once the procurement of a

service has already been completed, owners need a structure to monitor

the performance of the supplier for the life of the contract.

The researcher proposes that the tools documented in this thesis

will help organizations become more efficient in their selection and

management of services. There is very limited research in using best

value concepts in the delivery of traditional commodity services, and this

thesis seeks to add to that body of knowledge.

Research Scope

In 1994, the Arizona Board of Regents (ABOR) mandated that the

Arizona’s three largest public universities (Arizona State University (ASU),

Northern Arizona University (NAU), and the University of Arizona (UA))

7
abide by the Tri-University Furniture Contract (Tri-U Contract or Tri-U).

The goals of the Tri-U Contract are to allow the participating universities

to, “…enjoy the benefits of lowest price, established quality, best delivery,

and ease of ordering…” (PUR 401–08: Furnishings, Flooring, and Window

Coverings, 2007). The Universities may transfer the managerial and

renewal responsibilities of the contract between each other at the

expiration of each contract term; however, ASU normally takes the lead on

managing the contract.

ASU and UA are similar in size and surrounding geographic

conditions, while NAU is a smaller, more remote campus. Table 1.1

summarizes each campus’ characteristics (2010 demographic profile,

2010).

Table 1.1

Geographic Comparison of University Locations

No Geographic Characteristic Unit ASU NAU UA

1 Total City Population # 1,445,632 65,870 520,116
2 Total University Population # 84,472 25,364 50,920
3 Distance from Phoenix Miles 0 146 116
ASU is located in the Phoenix-area, NAU in Flagstaff, and UA in Tucson

The researcher utilized a best value selection and contract

management processes called the Performance Information Procurement

System (PIPS) and the Performance Information Risk Management

Systems (PIRMS), developed by Dr. Dean Kashiwagi at the Performance

Based Studies Research Group (PBSRG) (About PBSRG, 2012). The

8
process has been used to procure over 975 projects, totaling $4.7B, and

resulted in a high level of performance (9.5 out of 10).

In July 2008, ASU’s Ray Jensen (Associate Vice President,

University Business Services), John Riley (Executive Director of

Purchasing and Business Services), and Liz Chandler (Senior Buyer),

approached the Performance Based Studies Research Group (PBSRG),

where the researcher is employed as a project manager, and requested

assistance to improve the delivery and performance of the Tri-U Contract.

An interview with these individuals identified the following problems with

the current Tri-U system:

• Customers do not always receive at the end of a project what

was originally expected

• Lack of communication between the Capital Programs

Management group, general contractors, furniture installation

service providers, and University Business Services personnel

• Lack of performance measurements in terms of risk (on-time,

on-budget)

• Lack of performance measurements in product deficiencies

• Manufacturer design expertise is not fully utilized during project

pre-planning

Based on these problems, the researcher identified that the University

may be using a commodity mentality towards the management of the Tri-

U Furniture Contract.
9
 Upon further discussion with the ASU key staff, the researcher

proposed that PIPS and PIRMS may have new application in the field of

risk management of services typically perceived and managed as

“commodity.” The research test was facilitated through ASU’s Purchasing

Department, with support and input from the Purchasing Departments at

NAU and UA. The researcher believes that while any organization

applying the basic principles identified in this thesis will achieve some

level of success, the overall implementation strategy may be different.

Research Methodology Summary

The researcher conducted the tests described herein in three major

phases. The first phase began with a literature review that identified the

overall use of performance metrics within business, and specifically, how

metrics are used within bureaucracies. The review also summarized

inefficiencies within a bureaucratic structure, and classified these issues

within the context of Facility Management organizations. The review

concluded with an analysis of how Facility Managers typically identify and

manage risk, and specifically within the management of commodities

contracts. In general, the literature indicates that suppliers face inherent

risk, regardless of whether the owner perceives the delivery of the service

to be a “commodity.”

The second part of the first research phase was to determine the

scope of research efforts. The researcher conducted surveys with the

furniture supplier industry and buyers at each of the Universities. With

10
feedback from both groups, the researcher collaborated with the ASU

Purchasing group to develop a Request for Proposals that included best

value selection criteria and a contract pre-award clarification process.

The second phase of the research involved the shortlisting, and

eventual identification of the best value furniture suppliers. The

researcher also educated the suppliers during a pre-award clarification

phase. Once the Universities were comfortable their suppliers’ risk

management plans, three awards were made (to three different furniture

dealers).

The final phase of research was to monitor contract performance.

The researcher collected data on the performance of all furniture projects

and the dealers’ abilities to identify and manage risk. The data represents

furniture projects completed from July 2009 – January 2012.

Summary of Thesis

This thesis documents the testing of the hypotheses through the

implementation and documentation of a best value business and

leadership structure. The following is a summary of the thesis:

• Chapter 2 is a literature review summary of bureaucratic

structures and characteristics, and discusses the role of

Facilities Management within a bureaucracy. The review closes

with a high level analysis of risk within the supply chain, and

identifies techniques that Facility Managers can use to minimize

risk.

11
• Chapter 3 is a detailed explanation of how the research was

carried out to test the hypotheses. The chapter is presented

chronologically as the research progressed through the supplier

selection process and project performance monitoring.

• Chapter 4 presents all of the detailed raw data collected during

the supplier selection process and post-award project delivery.

• Chapter 5 is an analysis of the raw data presented in Chapter 4.

• Chapter 6 summarizes the significant results in relation to the

hypotheses and research objectives.

• Chapter 7 concludes the thesis and provides recommendations

for future research.

12
 Chapter 2

LITERATURE REVIEW

Summary of Findings

This chapter presents a summary of the literature reviewed while

investigating exploratory and background information for this thesis. The

literature showed that bureaucracies, due to their nature and size, face

inherent problems in being efficient and operating in the best interest of its

constituents. Additionally, the Facilities Management function, as part of a

larger corporate structure, shares similar characteristics of a bureaucracy

and may therefore encounter many of the same challenges. Because of

these traits, effective communication is difficult and critical information is

not always delivered in a timely fashion to those who need it most.

This chapter also surveys information on the current use of

performance metrics within bureaucracies, and specifically Facilities

Management. While most organizations use some limited metrics, they do

not use it as an integral part of their day-to-day operations. The literature

identified that performance measurements are not widely used because of

the difficulty in the collecting them.

Finally, the researcher examined the risk management practices of

organizations, and specifically, how these practices were used for

management of commodity services. The literature shows that, while

actual products delivered were important to end users, most risk that

commodities and services encountered are found throughout the supply

13
chain. This implies that organizations should focus on the measurement

of services at all major transactional points throughout the supply chain.

Introduction

Performance information, balanced scorecard results, and key

performance indicators can be useful data to predict current or future

performance of a company. A 1999 case study found that nonfinancial

performance metrics in the airline industry (such as on-time flights or

mishandled baggage) had a significant impact on future financial

performance of the airline (Behn & Riley, 1999). Organizations may begin

using non-financial metrics when their traditional processes or metrics no

longer add meaningful value (Fakhri, Menacere, & Pegum, 2011). Fakhri

et al. further identify that these types of non-financial metrics are

becoming more common due to their ability to provide meaningful

information used to increase organizational performance (as compared

with purely financial information). While the Facilities Management

function is making progress, it still lacks adequate customer satisfaction

information that is readily available (Tucker & Pitt, 2009).

State governments are also without performance data that allows it

to make effective decisions. A May 2011 Pew Center report identified that

out of 50 States, only 13 (26 percent) have implemented systems, with

supporting data, that show how federal dollars positively impacted the

local state’s economy (“Many States Fail to Measure,” 2011). Pew Center

director Robert Zahradnik identified that, “unless states have clear goals,

14
performance measures and data to generate that information, it is very

difficult for policy makers to prioritize transportation investments

effectively, target scarce resources and help foster economic growth”

(“Many States Fail to Measure,” 2011).

Companies may also begin using data to increase performance in

an effort to encourage personnel accountability. Hatry (2006) also

identified that performance metrics help managers better allocate their

limited resources. An effective metric simply identifies the risk an

organization faces, which allows leaders to make adjustments to increase

efficiency. Finally, Hatry (2006) identifies that performance measurement

systems must produce accurate data from the beginning; not doing so

may lead to decisions based on faulty information, and ultimately loss of

confidence in the measurement system.

Using performance metrics in a large company can help set the

overall direction of the group and allows the creation of goals that better

meet their strategic objectives (Romeo, 2011). In an anecdotal example,

a Criminal Justice Inspection report for a police district in Northern Ireland

found that crime reporting and resolution, and community interaction was

inconsistent (“Dissident threat and red tape”, 2011). The report found that,

in the absence of goals, managers of individual groups may establish their

own local policies and procedures, which may not necessarily be in

alignment the organization’s overall goals.

15
 The United States Federal Government has made legislation that

requires government entities to measure their performance. One of these

laws is the Government Performance Results Act of 1993. The Act strives

to, “improve the confidence of the American people in the capability of the

Federal Government, by systematically holding Federal agencies

accountable for achieving program results”, requires agencies to preplan

in order to meet objectives, and mandates that objective performance

information is available so that policymakers can make better decisions.

Initially, the Act was considered to be nothing more than additional

paperwork, and in response to the lack of adhering to its requirements,

President George W. Bush created the Program Assessment Rating Tool

(PART) (Schoen, 2008). In the Fiscal Year 2004, only 11 percent of the

407 federal programs rated with the PART received scores of “effective”,

and 38 percent could not provide documentation that supports their

reported performance levels (Gruber, 2005). The article by Gruber

provides clear evidence that using performance metrics in a very large

bureaucracy is not only possible, but can allow lawmakers to make data-

driven decisions. Any organization that is developing performance

information categories should base them on the overall goals; they should

be, “measurable, time limited, and realistically attainable” (USAID, 2010).

There are three objectives of this literature review. The first is to

provide a concise synopsis of problems that bureaucracies typically face.

Next, the researcher will consider how the Facilities Management function

16
typically identifies and minimizes risk, within the framework of the

bureaucracy in which it operates. Finally, this literature review will

conclude with an analysis of risk management practices, specifically in the

delivery of commodity services.

Issues Typically Encountered Within Bureaucracies

The first objective of this literature review is to summarize the

nature of bureaucracies, and identify the challenges that manifest within

its structure. A bureaucracy is defined as, “a body of non-elective

government officials” that are “characterized by specialization of functions,

adherence to fixed rules, and a hierarchy of authority” (Bureaucracy, n.d.).

While the definition explicitly states a bureaucracy is within ‘government’,

this literature review will generalize the definition, and apply it to any

organization which shares similar characteristics to the typical

‘bureaucracy’.

When people generally think of “bureaucracy”, they do not imagine

a structure needed to facilitate the operations of a large organization

(Toye, 2006). Rather, Toye (2006) identifies most people would

characterize bureaucracy using one, or more, of the following five traits.

1. First, individuals in a bureaucracy are, “accountable only to their

superiors, and not to those whose affairs they administer.” In

other words, even though a worker may be completing tasks for

the constituents the bureaucracy serves, the worker is only

concerned with, and accountable to, their direct supervisor.

17
 2. Second, bureaucracies, and especially governmental

bureaucracies, operate without competition and are therefore

less likely to be efficient in allocating and using resources

(Gratzer, 1998; Toye, 2006).

3. Next, in regulatory bodies, individuals are more susceptible to

have conflicts of interest with the party for which they are

supposed to regulate (Toye, 2006).

4. Fourth, bureaucracies may perform their tasks without discretion

to the actual intent of the rules and regulations they enforce. In

other words, “officials may apply the written rule literally and

exactly, and without the exercise of any judgment and

discretion.” (Toye, 2006).

5. And finally, bureaucracies may tend to duplicate the efforts of

other similar entities within the organization. This overlap not

only leads to waste of resources, it is frustrating for constituents

to identify which department they actually need to work with.

A bureaucratic structure is generally most efficient when the

organization is large and complex (Schneider, 1994). However, Schneider

and Kiser (1994) argue that bureaucracy is not efficient when control of

individuals within the system is not possible. If control were possible,

Schneider and Kiser suggests that the leader can ensure the subordinates

are acting in the best interest of the organization by monitoring and

modifying their behavior.

18
 In addition to these traits, a bureaucratic hiring structure can be

cumbersome. Within a fixed bureaucratic structure, hiring based on merit

does not always lead to the employment of an individual that aligns well

with the organization (versus the process of hiring based on dependence)

(Schneider & Kiser, 1994). Merit-hiring is to consider an applicant’s

overall capabilities and aptitude, while dependence-hiring is to mainly

consider their willingness to actually perform the task (Schneider & Kiser,

1994). Schneider and Kiser (1994) also argue that dependence hiring

should be done when the task is simple, because it reduces cost to the

organization by minimizing the approvals required to authorize the hire

(compared to approvals required for a merit-based hire).

Another challenge bureaucracies face is their general inability to

provide financial incentives to employees who perform well, or conversely,

bureaucracies are unable to enact regulations that would have negative

impact on employees who do not perform (Schneider & Kiser, 1994).

Schneider suggests that when inspection of the work being performed is

minimal (employees are less supervised), financial perks that are directly

contingent upon an employee’s performance are more important, and lead

to better results.

A bureaucratic structure with one individual holding an authoritative

position can create a situation that is susceptible to corruption (because of

the authority the persons has) (Schneider & Kiser, 1994). An alternative,

as discussed by Schneider and Kiser, is a board of individuals that share

19
the collective responsibility of decision making. While this may reduce

corruption and better represent the views of a larger audience, a board

can be very slow in initiating change and developing new methodologies

to increase efficiency.

Finally, bureaucracies can limit the ability of employees to provide

constructive feedback to improve operations because of the hierarchal

structure of the organization (Raina, 2010). As Raina identifies,

“establishing rules also to achieve predictability also means imposing

control using power, and rewarding or punishing. The consequence is a

loss of critical employee input, commitment, and motivation.” Therefore,

the reader may deduce that a situation where employee input is not

considered can drastically reduce morale and motivation to do good work.

The researcher also examined the communication process and its

efficiency within large organizations. Merriam Webster defines

communication as, “a process by which information is exchanged between

individuals through a common system of symbols, signs, or behavior.”

(Communication, n.d.) A study completed by Snyder and Morris (1984)

identify that as a bureaucracy increase in size, they face increased

difficulty in effectively communicating what needs to be done, and, how it

should be done. The study also found that the amount of communication

increases as the organization gets larger. The increased number of

communication transactions combined with ineffective communication

20
suggests that large bureaucracies can be slow to change (Haveman,

1993; Snyder & Morris, 1984).

This same study by Snyder and Morris also found that the critical

information is also not always effectively communicated.

“Quality of supervisors as communicators and the extent to which

job related information was shared within work groups were

associated with lower workloads (number of clients served, clients

served per employee) and higher levels of organizational efficiency

(relative and total costs of the operation)” (Synder & Morris, 1984).

This suggests that leaders can overcome the impact of ineffective

communication in a large organization by breaking the work into smaller

units, which collectively allow the organization gain the performance

benefits of smaller, more nimble, groups.

Raina (2010) identifies that “inadequate information is the major

cause of more than half of all problems with human performance. By

improving the quality and timeliness of the information people receive, you

can improve performance by as much as 20 to 50 percent.” This literature

review has previously identified that large organizations may communicate

inefficiently, slowly, and ineffectively, and when considering Raina’s

supposition above, the reader can presume that organizations will improve

performance by reducing its size, or increasing the quality of information

communicated.

21
 Many organizations have developed tools to increase the quality

and timeliness of communication. However, the effective use of these

tools on a project is dependent on an upfront agreement among a team as

to how they will communicate, and with what tools (den Otter & Emmitt,

2007). Most project teams face three main obstacles when establishing

protocols for communication:

“First, the number of electronic tools for design team

communication is increasing and therefore both users and

managers need to develop specific skills for collective use.

Second, differences between participants’ mother organizations’

use of electronic information systems and variety of communication

practices may create problems with compatibility. Third, difficulties

may occur in differences of opinion and understanding on an

individual level, including differences in the use of specific

electronic means for team communication and the lack of a

collective framework for meaning.” (den Otter & Emmitt, 2007)

Interestingly, de Otter and Emmitt (2007) also identify an “IT productivity

paradox” whereby organizations will spend more resources on information

systems, and yet, have no measurable increase in productivity.

Communication problems are also related to the nature of a

bureaucracy, and that the use of new tools alone will not resolve the

issues. Literature identifies several changes that organizations can make

to improve communication. One approach is to minimize the amount of

22
information passed between entities by only communicating what is critical

(Swanson, 1966). Kashiwagi proposes that when communicating with

experts, even less information needs to be conveyed because of their

ability to predict the future outcome (Kashiwagi D., 2010). Project teams

should establish at the beginning how they will communicate which will set

the tone for rest of the project (den Otter & Emmitt, 2007, “Many States

Fail to Measure,” 2011).

Part of establishing a communication protocol is to identify the

actual means and methods for how communication will take place. Nepal,

Yadav, and Solanki (2011) identify two principles to establish the medium

for discussion:

Communication in the form of written reports and memos lacks the

richness of information and the interactive qualities needed for

problem solving. On the other hand, face-to-face meetings are

costly in terms of time and efficiency, and usually involve limited

value-added work per person. Also they easily lose focus and drag

on longer than necessary. In lieu of regularly scheduled meetings,

therefore, Toyota emphasizes written communication supported

with visuals... If there are disagreements, then it is considered best

to hold a well planned, agenda-based meeting to hammer out a

decision face-to-face.

The researcher has thus far defined some common traits of a

bureaucratic structure, and the associated communication inefficiencies of

23
a large organization. The researcher will now examine the role of

Facilities Management (FM) within the context of a bureaucracy.

According to the International Facilities Management Association (IFMA),

FM is, “a profession that encompasses multiple disciplines to ensure

functionality of the built environment by integrating people, place, process

and technology” (“What is FM?”, n.d.). A 2010 report compiled by IFMA

and Today’s Facility Manager identified several characteristics of the FM

profession (Schwartz, 2010):

• Most FM professionals work in the services industry

(management or task-based functions)

• Facility Managers work and manage various buildings

throughout a company’s site

• Several planning and project management duties are performed

internally

• Services that require a specific technical expertise are

outsourced (janitorial, construction, etc.)

• The average staff size for an FM group is 59 people

• FM personnel saw an average salary increase of 2 percent in

2009. (It is interesting to note that in the same timeframe,

federal employees saw an average pay increase of 3.9 percent,

with all fields receiving an estimated average increase of 3.8

percent (Stone, 2009; “U.S. workers can expect skimpy raises in

2009.”, 2008)).
24
 • In 2008, 40 percent of Facility Managers reported that space

they were responsible for increased.

The researcher’s review of literature has identified that the role of

Facility Managers can be generally divided into two categories. The first

are technical responsibilities that require an expertise in specific areas

relating building maintenance and operations (“Administrative services

managers”, 2009). The FM may be required to provide knowledge on

resolving problems, monitor and improve energy efficiency, or provide

input on design. Their second role is to help organizations achieve their

goals and be an integral part of long term facilities planning. Tucker and

Pitt (2009) suggest that FMs “should be viewed strategically, where the

integration and alignment of non-core services required to operate and

maintain a business fully support its core objectives.” Tucker and Pitt

(2009) also recommend that FMs measure the performance of their

services as a method to add strategic value to the organization. As with

many other FM functions, performance management must be integrated

between FM and the company’s culture in order for it to be successful

(Amaratunga & Baldry, 2002). FM has a direct impact on the bottom line

so the successful implementation of performance metrics is critical (Tay,

2006).

These characteristics and roles of an FM department have shown

that it serves a specific purpose and function within an organization, and

by Toye’s definition, the Facilities Management department is itself a

25
bureaucracy (Toye, 2006). Therefore, the researcher proposes that FMs

face the same difficulties and inefficiencies of a bureaucracy as this

literature review has previously identified. However, due to the

specialized and hierarchical nature of the FM function within an

organization, it is still structured best as a bureaucracy (Cotts, 2010).

In summary, the first objective of this literature review has been to

identify the difficulties that bureaucracies face. Individuals within a large

organization may only be accountable to their direct supervisor, and

therefore may not always have their customer’s best interest in mind. As

organizations get larger, effective communication that relays critical

information in a timely fashion becomes increasingly difficult. The

multiplicity of communication tools (many of which do not adequately

address the receivers’ various levels of understanding) have not

substantially improved an organization’s communicatory abilities. Finally,

this literature review has established that Facilities Management shares

many similar characteristics of a bureaucracy, and therefore faces several

of the same difficulties and inefficiencies. FM can improve its value to an

organization by using performance metrics that are an integral part of

company cultural.

Identify how Facility Managers Identify, Manage, and Minimize Risk

Risk is defined as anything that affects time (schedule delays),

cost, or customer satisfaction (Kashiwagi, 2002). In a broad business

context, risk is anything that affects financial operations, and risk

26
management is the process of preventing events from affecting such

operations (Kraman & Hamm, 1999). While these definitions of risk are

more measureable when applied to a project that has defined a cost and

duration, understanding risk in a Facilities Management functions requires

a different perspective.

The researcher next attempted, albeit unsuccessfully, to find a

simple explanation of how Facility Managers should minimize risk.

Instead, the researcher has identified a general three step approach to

risk management based. The first step is that FMs must measure their

performance to get an accurate snapshot of reality. Tucker and Pitt

(2009) suggest that it is especially important for FMs to measure

performance in a variety of key areas that include both the financial and

‘intangible’ aspects of their profession. Measuring different areas of

performance helps organizations have a well-balanced approach to setting

and monitoring their objectives. Cotts (2010) provides a succinct

explanation of why measurement is important.

We intellectualize the need for measurement, but none of us likes

to be measured, because our experience shows that there is

always some sort of punishment for failing to measure up. But how

will we ever know if we are meeting objectives and customers’

expectations unless there is a dispassionate, consistent way to

measure progress – or failure? How do we know that we are

achieving constant improvement if we are not measuring against

27
 some baseline? … Measurement – consistent measurement over

time – is fundamental to good-quality facility management. (p. 467)

The next step is to assess the probability of the risk occurring, and

to develop plans that minimize the risk (Alexander, 1992). The key in

minimizing the risk is to plan ahead before the risk actually occurs

(Boehm, 1991). Facility Managers should also address any activity that

could harm the financial viability of the organization (Barton & Hardigree,

1995). Much of the facilities risk management literature focuses on

planning, and responding to, these types of catastrophic events; however,

there is a lack of resources on managing the day to day risk (anything that

may affect time, cost, or customer satisfaction). More recent literature

suggests that FM departments should focus on the risks (or metrics) that

have an impact on the value they add to the organization (Cotts 2010).

Regardless of how a facilities manager views the type of risk to be

managed, the common theme from the literature is to plan ahead before

the situation arises.

An alternative approach to risk management, found as a

component of the PIPS, is to transfer the risk and accountability to the

expert (Sullivan & Guo, 2009). The philosophy can be used by Facility

Managers to better manage their areas of responsibility. The PIPS

process identifies that risk should be managed in the following manner

(Kashiwagi, 2012a; Sullivan & Guo, 2009):

28
 1. The expert should first identify what their overall plan is to

complete the project.

2. They should then address anything that could stop them from

being successful on the project, and provide a simple plan how

they will minimize the potential risks.

3. Once the project or service has begun, the expert vendor should

track any changes from their baseline expectation.

The actual process of transferring the risk to the expert occurs when

vendor completes these steps, and the owner releases control and

accountability to the vendor.

Risk management and transparency can also reduce an

organization’s litigation costs, as seen in a case study of the Veterans

Affairs (VA) Medical Center in Lexington, Kentucky (Kraman & Hamm,

1999). The authors of the case study identified that the Lexington facility

had a policy of full disclosure to patients when faulty care was provided,

which is not necessarily the norm for VA hospitals, and the private sector

in general. The policy states that patients must not only be told when a

problem has occurred, but that the Hospital must also provide assistance

in filing a claim. In Lexington facility, the average malpractice claim was

$720,000 compared to $1,484,000 in the private industry. While the study

is limited to performance in a single facility, the results seem to indicate

that a policy of openness minimizes patient frustration. The authors

proposed that the reduced litigation costs were due to fewer claims being

29
filed because information was passed to the patients with transparency.

Costs were also minimized because settlements more accurately reflected

the actual need, and were without the burden of additional punitive

damages included in the claim.

So far, this literature review has framed risk management in the

following context:

• Risk is defined as any event that may affect time, financial

resources, or end-user expectation.

• Facility Managers can minimize risk by allowing an expert

vendor to identify their scope of work, document and plan for

anything that may stop them from being successful, and track

any deviation from the baseline expectation.

• FMs can show the value of the services they provide by

consistently documenting and measuring their performance.

Performance metrics can be used to identify how effective the FM’s

risk management techniques are. Some of these metrics are time to

respond to requests for service, time to respond to emergency calls, or

perhaps the overall quality of services provided to the customer (Cotts

2010). It is important to also note that measurement can be quite difficult,

especially when FMs attempt to gather metrics on cost. This is because

oftentimes the accounting and budgeting systems are too complicated to

allow the FM to extract the simple data needed for analysis (Cotts 2010).

Whatever metrics a FM uses to monitor performance, the information

30
needs to show the department’s overall ability to meet the needs of the

customer, and identify how the FM function serves to help achieve the

company’s goals (Brackertz & Kenley, 2002; Cotts, 2010; Tucker & Pitt,

2009).

Most organizations do not effectively use performance metrics to

manage performance (Tucker & Pitt, 2009). One of the reasons is that

upper management has not pushed to measure risk as a core operational

procedure within their company (Bekefi & Epstein, 2007). The difficulty is

that management has no way to effectively consider risk from a holistic

standpoint, partly because the strategy to minimize risk is solely based on

financial information. The result is the managers fail to consider other

factors that are not included in analyses. In fact, 97 percent of 4,238

executives surveyed identified that their companies do not do enough to

preplan for risk (Bekefi & Epstein, 2007).

A second reason why companies fail to measure performance or

quality of service is that it is difficult. It is labor intensive, meaning that it is

costly (Quesada & Gazo, 2007). Secondly, there is no widespread

agreement on what Facility Managers should actually benchmark (Tucker

& Pitt, 2009). The disparity of what organizations measure inhibits their

ability to identify relative performance (Cuthbertson & Piotrowicz, 2008).

However, many industries recognize the need to use metrics to improve

performance (Quesada & Gazo, 2007).

31
 Finally, organizations often do not have incentive to measure

performance because it is not tied to the company’s goals (Tucker & Pitt,

2009). In other words, if a company is able to move past the difficulties of

benchmarking, there may only be negligible impact in identifying the

improvement organizations make. Cuthbertson and Piotrowicz (2008)

identified that organizations within a supply chain may work in silos, and

only focus on the internal workings of their business. As a result, their

incentive to monitor performance of other nodes in the chain is minimized.

The researcher also examined the outsourcing practices of Facility

Managers, and identified how these services are measured. A 2002

survey published by FMLink identified that most organizations may

outsource to save money (“FMLink outsourcing survey”, 2002).

Organizations may see cost savings from outsourcing for a variety of

reasons, including (Maechling & Bredeson, 2005):

1. Opening the service to competition may achieve lower costs

than those of the in-house function (because of the lack of

internal competition to minimize costs).

2. Because the vendor being hired to perform the service is an

expert, they may be able to modify the level of service provided,

while still meeting the organization’s goals and requirements.

3. The service providers have access to the latest tools that an

internal FM functions would not otherwise be able to use.

32
 4. Finally, external vendors have access to suppliers and may be

able to trim costs in ways internal FM departments cannot.

The same survey identified the following areas as most commonly

outsourced (“FMLink outsourcing survey”, 2002):

Table 2.1

Facility Management Outsourced Functions

Percentage of Respondents
No Function that Outsourced
1 Custodial and Housekeeping 72%
2 Design and Architecture 65%
3 Landscape Maintenance 63%
4 Major Moves 54%
5 Security 51%
6 Preventative Maintenance 50%
7 Engineering 46%
8 Utilities Maintenance 45%

Commentary included in the survey indicated the following (“FMLink

outsourcing survey”, 2002):

• FM departments choose to outsource to acquire a service for

which they have no specialized skilled in-house to perform.

• The most difficult part of the outsourcing was hiring the best

contractor for the job.

• Contrary to other literature in this review, which identified that

FMs should transfer the risk of nonperformance and

accountability to the expert, most respondents to the FMLink

survey identified that the best way manage the performance of a

33
 hired vendor is to review, evaluation and inspection of the work

performed.

• To a lesser degree, the respondents also identified that the use

of surveys and performance-based measures was also effective

in managing performance.

Risk Measurement of Commodity Services

The final objective of this literature review is to establish a broad

definition of commodity services, and the current risk management

practices for these services. The service industry is one that, “creates

services rather than tangible objects” and include sectors such as,

“…banking, communications, wholesale and retail trade, all professional

services such as engineering, computer software development, and

medicine, nonprofit economic activity, all consumer services, and all

government services, including defense and administration of justice”

(“Service industry”, n.d.).

A commodity, in its simplest definition is, “a mass-produced

unspecialized product” (Commodity, n.d.). Title 7, Chapter 1 of the United

States Code defines commodities as various foodstuffs for which

“contracts for future delivery are presently or in the future dealt in”

(Commodity Exchanges, 2004). Some literature references the terms

“commodification” and “commoditization”, and it is important for the reader

to understand the subtle differences between the two. Generally,

“commodification” refers to the practice of assigning a market value to a

34
good or service that it did not previously have (Rushkoff, 2005).

“Commoditization”, on the other hand, is the process where a good or

service previously has distinguishing attributes and limited quantities, and

becomes mass-produced and nearly identical, with price being the primary

differentiating factor (Rayburn, 2010; Reimann, Schilke, & Thomas, 2010;

Rushkoff, 2005).

An industry that has been commoditized is often identified by the

presence of fierce price-based competition, which results in lower

profitability (Reimann, Schilke, & Thomas, 2010). In fact, Reimann et al.

identify four metrics that can be used to identify the level of

commoditization of an industry:

• The first is the level of product homogeneity; that is, the ability to

exchange a widget with a competitor’s with no noticeable

difference in terms of quality or performance to the buyer.

• The second metric is price sensitivity, wherein a customer seeks

to obtain the lowest price, and assumes that most other factors

of a product are equal.

• Switching cost is the third trait, and measures the cost a buyer

incurs when moving their business to a new supplier.

• Finally, the fourth measurement is industry stability, as reflected

by a consistent demand for product and unchanging customer

base.

35
 A commodity, or perfectly competitive, market exists when the

following characteristics are present (Baumol & Blinder, 2009):

1. Multiple buyers and sellers

2. Indistinguishable products

3. Companies’ ability to easily participate in, and disembark, as

suppliers in the given market

4. Well-informed consumers armed with accurate data about the

product they are purchasing

The researcher now examines the level of risk associated with the

delivery of commodities. Supply chain is a, “network of facilities and

distribution options that performs the functions of procurement of

materials, transformation of these materials into intermediate and finished

products, and the distribution of these finished products to customers”

(Bhatnagar, 2010). A commodity chain is simply a subset of the supply

chain definition: “a network of labor and production processes whose end

result is a finished commodity.” (Korzeniewicz & Gereffi, 1994).

Korzeniewicz and Gereffi extend this definition to a global supply chain

(GCC), which is the consideration of international organizations whose

focus is a single commodity that links consumers, businesses, and

governments together. Activities or entities within a commodity chain can

be represented by nodes that are connected through networks

(Korzeniewicz & Gereffi, 1994). These different entities interact with

multiple components: procurement of inputs (raw materials), labor utilizes

36
these inputs, transportation, distribution, and finally, consumption (Dicken,

Kelly, Olds, & Wai-Chung Yeung, 2001). The level of profit at each node

is relative to the overall degree of competition in the market that each

node operates (Korzeniewicz & Gereffi, 1994). Korzeniewicz and Gereffi

also identify that there is more wealth found in segments of the commodity

chain that are critical to the creation of the commodity at hand, compared

to those that are “peripheral” in nature (for example, providing raw inputs

to a non-essential component of the final product).

Korzeniewicz and Gereffi identify that the structure of global supply

chains is divided into two approaches: producer-driven and buyer driven.

A producer-driven GCC is typically characterized by a large international

company being the key role in managing the production network. These

may include companies in the automobile, aircraft, and other related

industries. A buyer-driven GCC is identified by large retailers that

coordinate the production networks, and is especially typical of labor-

intensive production activities (clothing, toys, etc.).

The value-chain approach is a firm’s consideration of how they use

their supply networks, labor force, and other resources to create value

(Nicovich, Dibrell, & Davis, 2007; Porter, 1998). Porter’s generic value

chain defined an overall approach for how companies can measure value.

Each unique activity that a company performs is a “value activity”, and is

categorized into primary and support activities. Primary activities are

anything that directly impacts the creation of product, transfer of the

37
product to the consumer, and follow-on customer support. Support

activities provide ancillary input in product creation, which may include the

procurement of raw materials, the technological infrastructure to facilitate

delivery of product, and human resources.

Value is what a consumer is willing to spend for a given product,

and is reflected by total revenue (price per unit multiplied by the total

number of units sold) (Porter, 1998). Margin therefore is the difference

between value and what it actually costs a firm to produce the product.

Value creation is, “the ability of the components of the value system or

chain to work together as a cohesive whole in determining the level of

value provided to the ultimate consumer” (Nicovich, Dibrell, & Davis,

2007).

Porter (1998) identifies that buyers also have value chains, and like

a firm, the inputs of a buyer’s chain is delivered by other institutions and

organizations. Porter provides keen insight on how differentiation should

actually be viewed:

‘Quality’ is too narrow a view of what makes a firm unique, because

it focuses on the product rather than the broader array of value

activities that impact the buyer. Differentiation, then, derives

fundamentally from creating value for the buyer through a firm’s

impact on the buyer’s value chain. Value is created when a firm

creates competitive advance for its buyer – lowers its buyer’s cost

or raises its buyer’s performance. The value created for the buyer

38
 must be perceived by the buyer if it is to be rewarded with a

premium price… (Porter, 1998, p. 53).

In other words, buyers and firms should consider an input’s placement in

the overall value chain, and not solely consider quality as the

differentiating factor.

The global commodity chain framework and Porter’s value chain

concepts are similar because they both identify that firms should subdivide

their production processes into related categories to help realize where

value and efficiencies may be created (Korzeniewicz & Gereffi, 1994). In

the manufacturing industry, a value chain is often realized through the

cooperation of different manufacturers to deliver value to their common

customer or market; and for some companies, there is no difference

between a “value” chain and a “supply” chain (Bititci, 2006).

Supply chains deliver goods, services, and decision making data to

the customer; commodities are part of the supply chain, and therefore

encounter similar risks as any other product or service in a supply chain

(“The supply chain management processes”, n.d.). Goldsby and Rao

(2009) categorize the general types of risks that a supply chain may

encounter:

1. Environmental factors – issues that affect the overall

environment or situation that supply chain operates (politics,

society, etc.).

39
 2. Industry factors – issues within the market that the product is

being sold.

3. Organizations factors – issues relating to the firm level,

including behavior and research and development.

4. Problem-specific factors – issues relating to single issues that

affect the entire supply chain.

5. Decisions-maker factors – issues relating to an executive, or

steering committee, and the individual’s or committee’s level of

expertise in making the decisions.

Production uncertainty is the only issue mentioned above relating

specifically to the product delivered to the buyer. Therefore, the literature

indicates that most supply chain risk is not related to the actual product

being delivered, but risk is in the processes or systems that supply the

good.

There is a wealth of literature discussing supply chain risk

management. However, there does not seem to be singular approach to

mitigate all risk. Supply managers at IBM identified through a survey that,

“Overall, it appears that supply management professionals do recognize

that risk exists in their upstream supply chains, though often it is

discussed only when a problem occurs. The extent of formal systems to

make risk visible is not prevalently used” (Basu et al., 2008). Salonen

(2010) suggests that suppliers take the following steps to minimize risk:

40
 • Create an internal team that attempts to identify and minimize

the risk.

• Eliminate barriers between the Finance and Procurement

departments.

• Create transparency within the supply chain that allows each

participant to view critical information. With full transparency,

risk managers can now adjust their risk management practices

to focus on the suppliers that may bring risk.

• Identify who the top suppliers are to the business, and help to

ensure they are successful.

• Once these steps and philosophies have been achieved, the

risk manager can now take steps to minimize the risk

A slightly different approach that the IBM White Paper (Basu et al.,

2008) suggests is to identify the current risk organizations face in the

supply chain, and like many other processes, prioritize the risk, manage it,

and develop a plan to implement the company’s risk mitigation strategy.

Performance measurement in a supply chain is slightly different

(compared to performance measurement on a single project), in that the

organization should maintain an array of critical metrics about various

suppliers (Trent, 2010). The literature identified that risk is often

encountered as product traverses the supply chain, and metrics should

focus on the entire system (Barber, 2008; Rao 2009).

41
Summary and Conclusion

This literature review first identified that while most organizations do

not use performance metrics, increasing its use can be a catalyst to make

improvements within the company. The review defined bureaucracy, and

identified that many are inefficient, are susceptible to collusion with the

private interests they are meant to regulate, and that due to the size and

structure of a bureaucracy, communication of critical information is slow

and inaccurate. The literature then identified that Facility Management

departments share similar characteristics of a bureaucracy, and therefore

may encounter many of the same problems.

This review then described how the FM profession minimizes risk.

The consensus is that measurements should be used, but are often not

because of their financial burden to implement, lack of agreement of what

aspects of FM should be monitored, and no incentive to actually use

measurements (because they are not tied to the organization’s strategic

objectives). The literature also shows that FMs typically outsource to

reduce costs or because the department does not have the technical

expertise to complete the tasks required.

Finally, the researcher defined commodity services as a situation

where owners perceive price as the differentiating selection factor.

Commodities, like most other products and services, are part of the supply

chain, and encounter similar risks. Commodities, however, are viewed to

be nearly identical (to a buyer), which implies that managing the delivery

42
of the commodity is more critical (in terms of cost and time savings) than

the actual product itself.

The researcher surmises, and is confirmed by literature, that most

FM Functional Groups do not have available a simple performance

information system that tracks risks according to time, cost, and client

satisfaction. The literature has also shown that owners should consider

factors outside of price when selecting commodities. Organizations can

improve the value they provide to customers utilizing Porter’s Value Chain

framework.

43
 Chapter 3

RESEARCH METHODOLOGY

Introduction

The researcher divided the research methodology into three main

phases. The first phase gathered background information and current

conditions of the Tri-U Furniture Contract. The second phase used the

results of phase one to develop a Request for Proposal (RFP), identify the

potential best value vendors, and require the vendors to develop a

detailed plan for their approach to manage and minimize contract

deviations and risk. The final phase was to assist the vendors in

implementing their risk management structures, monitor contract

deviations, and as needed, make adjustments to the system. As the

researcher progressed through execution of the research methodology,

certain key indicators identified that the delivery of a furniture services

contract is not actually a commodity service. This chapter will highlight the

emergence of these indicators as they were observed.

ASU had previously used PIPS and PIRMS on the following types

of contracts and projects: a 16-year $800M Dining Services contract, a 3-

year $0.57M SRC Recreation Equipment Services contract, a 10-year

Intercollegiate Athletics (ICA) Multimedia Services contract, a $77.5M IT

Networking contract, and a $40.97M design and construction project of the

Packard Drive Parking Structure (Arizona State University | Performance

Based Studies Research Group, 2011; Michael, 2008).

44
 The timeline of events for overall execution of the research

methodology was as follows (see Table 3.1):

Table 3.1

Schedule of Research Methodology Execution

No Schedule Item or Event Date

PHASE ONE – IDENTIFY CURRENT CONDITIONS
1 Meeting with senior ASU administration 7/2008
2 Idea Exchange Session and Educational Meeting 11/10/2008
with service providers
3 Survey service providers 11/20/2008
4 Survey university buyers 12/3/2008
5 Identify current furniture purchasing volume 2/13/2009
PHASE TWO – VENDOR SELECTION AND CONTRACT AWARD
6 Issue Request for Proposal (RFP) 3/5/2009
7 Pre-Proposal conference 3/10/2009
8 Deadline for inquiries 3/30/2009
9 Proposals due 4/6/2009
10 Evaluation committee training 4/16/2009
11 Evaluation committee ratings due 4/20/2009
12 Identify shortlist of firms to interview 4/30/2009
13 Interviews 5/14, 5/20/2009
14 Pre-Award Kickoff Meeting 6/12/2009
15 Pre-Award Period 6/13 – 6/24/2009
16 Pre-Award Summary Meeting 6/25/2009
17 Contract Award 6/30/2009
PHASE THREE – RISK MANAGEMENT AND SYSTEM REFINEMENT
18 Public posting of performance information 7/23/2009
19 Project size analysis 3/8/2010

Phase One: Project Scoping and Current Conditions

The primary objectives of phase one were to:

1. Meet with the industry to gauge interest in, and support for, a

best value approach to furniture contract procurement and

delivery

45
 2. Identify the current conditions of the existing Tri-University

Furniture Services environment

With permission from the University, the researcher coordinated and

provided an optional best value information session to approximately 50

individuals from the furniture industry. Dialogue was also encouraged

throughout the meeting. Much of the discussion centered on the potential

evaluation criteria, but also focused on:

• Financial evaluation of proposals against the State of Arizona

furniture contract.

• Level of university participation during the evaluation and post-

award phases.

• Resolving differences in motivation between dealers and

manufacturers on how to participate in the contract.

The discussion yielded valuable feedback needed to issue a complete and

accurate Request for Proposals. Some of the key pieces of information

gathered were:

• The post-award purchasing structure needed to include a

component that allowed buyers to make match-existing product

purchases.

• Not all potential proposers had a State of Arizona furniture

contract, and therefore, an evaluation criterion that considered

list-price percentage discounts from the State contract could not

be used.
46
 • The proposers wanted the ability to indicate if they were

proposing on the budget or primary contract.

• ASU needed to provide historical purchasing levels for the

different universities, and which contracts these purchases were

made on.

The researcher wanted to survey the vendor community to identify

their perception of the industry’s current conditions, and also verify their

support of a best value selection and contract management approach to

the Tri-U agreement. The survey also contained an open-ended response

question. Please see Chapter 5 for a detailed explanation of the results,

and Appendix A for a copy of the survey. This survey was distributed after

the information session. The results of the survey indicated that there

may be indeed substantial factors to consider and address for this type of

contract; this was the researcher’s first indication that Tri-U furniture

services contract should not awarded with a commodity mentality.

As previously discussed in Chapter 1, Arizona State University

approached the researcher for assistance in improving their furniture

services contract, and identified several problems. The researcher

wanted to gather additional background information from buyers that have

previously made furniture purchases. The senior ASU purchasing buyer

provided a list of contacts for a survey conducted by the researcher.

Please see Appendix B for a copy of this initial buyer survey. The

researcher also documented the existing furniture procurement process,

47
which is summarized in Figure 3.1 below. The existing process for

purchasing furniture was as follows:

• The user had some sort of need for furniture and may have

chosen to visit the contracted dealer’s showroom. The furniture

could be for new construction, or it could be to match the

existing in-place furniture.

• If the project was new (not match-existing), the buyer would

either purchase off of the Primary Award contract, or the Budget

Award contract (depending on their available funds and

preferences).

• Once a potential furniture option was selected, the dealer

provided the buyer with a price quote.

• If the quote was more than $250,000, the buyer would need to

either go out for public bid with the project, or purchase directly

from the on-contract dealer. If the value was less than, or equal

to $250,000, the buyer was required to use either the Tri-U

Primary or Budget contract.

• Once the user finalized their supplier selection, the furniture

team designed the solution, compiled a final quote, and installed

it.

The existing process did not have a formal structure that monitored

performance of the dealers, or encouraged project preplanning and risk

minimization.
48
 Figure 3.1 Previous Tri-University Furniture Purchasing Process

Phase Two: Vendor Selection and Contract Award

Using the information gathered from Phase One, the researcher

and the senior buyer from the ASU’s Purchasing Department compiled the

Request for Proposals (RFP). This RFP was the University’s first furniture

RFP that incorporated best value procurement methodologies, and as

such, there were several differences from a traditional furnishing services

RFP. These differences are demonstrated in a relative fashion by

comparing ASU’s previous Tri-U Furniture Contract, issued October 2,

2003, to the current best-value Tri-U Furniture Contract, issued March 5,

2009. Please see Table 3.2 below.

49
Table 3.2

Evaluation Criteria from State of AZ, ASU Traditional, and Best Value RFPs

State of Arizona ASU Traditional Best Value

1. Organizational
Capacity
2. Financial Capacity
3. Past Performance
4. Key Personnel
1. Level and quality of 1. Interview
service
2. Risk Assessment
2. Commitment to and Value Added
relationship, Plan
proposed strategic
alliance 3. Service Proposal
3. Demonstrated 4. Financial
capability for e- Proposal
procurement, ability
of the firm to accept 5. Past
electronic methods of Performance
ordering Information

4. Quality of Product

5. Price and discount

structure

6. Capability to accept
University
procurement card for
payment

Some of the State of Arizona and ASU Traditional RFPs’

(collectively called “Traditional RFP”) evaluation criteria appear similar to

the Best Value RFP evaluation criteria. However, their definitions are

markedly different. In general, the Traditional RFP does not specifically

consider the proposers’ ability to manage and minimize risk that would

stop them from being successful on a project-by-project basis. The

Traditional RFP does not contain requirements that the proposal be ‘blind’,
50
meaning that the evaluation committee knows who each proposer is. The

impact is that the evaluators may use their bias to rate proposers

(Kashiwagi, 2012b).

The absence of risk management in the Traditional RFP was a

second indicator to the researcher that the client perceived the delivery of

the furnishing services to be a commodity. If a buyer perceived that there

is limited risk in a furniture services contract (price or product

characteristics are the main selection factors), there is therefore no need

consider the proposers’ ability manage and minimize risk. The Best Value

RFP is different because it was specifically designed to require proposers

to identify their approach in managing and minimizing the risk they do not

control. In an effort to eliminate any potential evaluator bias, the Best

Value approach required that submittal documents were void of any

information that could be used to identify who the proposer is.

ASU had the option to award the furniture contract through the

State of Arizona’s existing furniture service contract, but identified to the

researcher that they would receive better pricing if the University issued

their own RFP. The researcher collected information from the proposers

on the average discount the University was receiving by issuing their own

RFP. One of the participating members of the Tri-U Furniture Consortium

(Northern Arizona University) also requested that the new RFP require

that dealers do not assess trip charges for onsite visits and designer

meetings.

51
Structure of the PIPS RFP and Evaluation Criteria

In addition to the problems identified in Chapter 1, the Universities

wanted to simplify the procurement delivery structure of the furniture

services contract. Under the previous RFP, a separate award was made

every time a customer needed a special type of furniture product that they

felt was not offered with the existing awarded vendors. From a

procurement standpoint, it became very burdensome to manage so many

contracts.

The University wanted to award up to three ‘primary’ contracts and

one ‘secondary’ (or budget) contract. There would also be match-existing

awards on an as-needed basis. The intent of each primary award was to

offer standardized, though diverse, product lines to a very large client

group. Each purchase (herein referred to as a ‘project’) would be defined

as capital, match-existing, or non-capital. The project’s classification

determined which risk reporting tools the vendor utilized.

Table 3.3

Project Type Definitions

No Project Type Definition

Furniture from the existing manufacturer as the in-place
1 Match-existing
furniture
Any project run through the Universities’ Capital
2 Capital
Programs office
All other projects not categorized by Match-existing or
3 Non-capital
Capital

52
 The best value furniture RFP’s evaluation criteria was similar to

previous PIPS pilot projects that ASU had completed. The PIPS process

was developed by Dean Kashiwagi (Kashiwagi, 2012b). The best value

furniture RFP contained five evaluation criteria:

• Past Performance Information (PPI)

• Risk Assessment and Value Added Plan (RAVA)

• Service Proposal

• Financial Proposal

• Interview

The RFP did not identify the specific points allocated to each

criterion. The PPI, RAVA, Service Proposal and Financial Proposal were

submittals. The evaluation committee rated each submittal (except price),

the University shortlisted proposers, and conducted interviews with each

shortlisted proposer.

Past Performance Information

The Past Performance Information was used to verify that

proposers were able to demonstrate some level of previous performance

history. The researcher’s experience through previous implementations of

PIPS projects is that requiring proposers to submit customer surveys

discourages some low-performing companies from participating at all.

Additionally, the submitted PPI scores from vendors that were awarded a

contract would serve as baseline performance metrics.

53
 The RFP required that the Proposers submit PPI information on

certain ‘critical components.’ The Proposers then identified past clients

that each component had previously performed work for and solicited

surveys from these past clients; please see Appendix C for a copy of the

survey that the Proposers sent to their previous clients. The critical

components that vendors had to submit PPI information were:

• Manufacturer’s Representative

• Dealer's Representative

• Lead Designer

• Lead Installer

During the educational pre-bid meeting on March 10, 2009, the potential

proposers were told that they may turn in PPI information on any

component that they felt was critical. However, this level of openness

created much confusion and generated many questions on what the

proposers had to actually turn in to meet the PPI requirements. As a

result, the University issued an Addendum (Appendix D) that, amongst

other items, clarified that each proposer must turn in PPI information for

the aforementioned components. If the proposer had a different

management structure, they were to identify this in their proposal.

Two of the 14 proposers turned in the PPI information incorrectly.

One proposer modified the customer survey questions, and the other did

not submit surveys or the customer responses in a Microsoft Excel file.

However, these two proposers were disqualified (for other issues

54
unrelated to PPI) and therefore, the University did not make a decision on

how to proceed with regard to their PPI deficiencies.

Project Capability and Financial Proposal Submittals

Proposers were required to submit a Risk Assessment and Value

Added (RAVA) Plan and a Service Plan. As is standard in the PIPS

process, each Project Capability submittal must not contain any identifying

information, supplier product names, or graphics, and must be submitted

on the Microsoft Word templates provided by the University as part of the

RFP. The entire RAVA plan had a two page limit, the Transition Milestone

Schedule had a one page limit, and the Service Proposal had a two page

limit.

The first component of the RAVA provides the Proposer with an

opportunity to identify any risks that they feel would impact their ability to

successfully execute the contract. The nature of the risks submitted on

the Tri-U contract was different from those of a project with a definitive

scope and cost. Rather, the risks the proposers identified addressed their

ability to meet the needs of the University from a process and operational

standpoint. The proposers also provided solutions to minimize each risk

they identified.

In the second component of the RAVA, the Proposer identified any

Value Added options or ideas that would benefit the University. The

Proposer was required to identify the options’ impact on schedule,

financial proposal, or University satisfaction. The Value Added plan, in

55
retrospect, should not have been used as part of this particular RFP. The

Tri-U RFP was not for a specific project; therefore, addressing cost or

schedule for an undetermined amount of volume was very difficult to

quantify. Normally, the Value Added approach contains specific

information from the proposers about how an option will increase or

decrease cost and schedule (Kashiwagi, 2012b). However, it was difficult

for the Proposers to provide Value Added options that were substantive

enough for the University to evaluate because the RFP did not have

project-specific information.

The final and third part of the RAVA was the Transition Milestone

Schedule. The Proposers identified the key steps and dates that would

occur to transition the Universities to the new contract. While it provided

some information to differentiate the Proposers, the Milestone Schedule

was difficult to evaluate. In order to identify if a proposer had a ‘good’

schedule, the evaluators needed to know what assumptions the proposers

made in compiling their schedule. Additionally, because of the multiple

awards, the vendors would need to work together to collectively transition

the University to the new Tri-U contract. The Milestone Schedules

obviously could not account for the other awarded proposers’ schedules,

so the overall value of a Schedule, at the Evaluation Phase, was very low.

The researcher proposes that a milestone schedule has tremendous

value, but only as a product of a thorough, coordinated preplanning phase

that includes all critical participants.

56
 The second submittal was the Service Proposal. In this document,

Proposers identified how they would structure the contract so that it meets

the needs and expectations of the Universities. Proposers explained what

their service and scope would be, and what would happen as a result of

their efforts. The Proposers also documented how they knew that their

Service Proposal was achievable given the Universities’ constraints.

The University examined financial information from the proposers in

two separate stages in the Evaluation Phase. The Initial Financial

Proposal was required from all submitting vendors, before any shortlisting

had occurred, and was not rated by the committee. This initial proposal

required vendors to turn in product line information, product percentage

discount off of the list price, installation and delivery charge as a

percentage of the product cost, and design fee as a percentage of the

product cost. This financial submittal requirement was used on the

previous Tri-U RFP, and is similar to standard industry practice (National

office furniture: RFP and master documentation, 2010).

It is important to note that a process for actually evaluating the

financials was not identified in the RFP, nor explained to the proposers at

the educational meeting. The researcher regularly queried the University

for three months prior to RFP release (February – April 2009) as to how

they would evaluate the financials. The researcher initially proposed that

the RFP should include a typical design that the vendors would price out.

This recommendation was based on feedback received from individual

57
conversations with dealers, and the Idea Exchange Session (November

2008). However, the University felt that using typicals would not

sufficiently provide information to evaluate product cost of the proposers.

The University intended to somehow analyze percentage discounts of the

manufacturer’s list prices and identify the lowest cost supplier.

The researcher viewed the evaluation of product discount

percentages as evidence that clients who buy office furniture may be

using a commodity mentality. The furniture industry’s practice of applying

large discounts to list prices may be their response to buyers’ expectation

of discounted pricing. Recall that, by definition, if a buyer perceives a

good to be a commodity, price must then be the main differentiating factor.

In fact, this exact sentiment was revealed in a conversation with the

researcher in that identified University, “departments will figure [product

prices] and go with the least expensive supplier.” Therefore, if products

from different manufacturers are mainly distinguished by price, owners

may use the discount-off-list pricing structure as a means to evaluate

competing vendors. Essentially, the impact of implementing this approach

is that it tells the vendor community, ‘we are going to evaluate your costs

based on how much of a discount you offer as compared to your

competitors.’ The researcher conjectures that owners would only use this

approach to financial evaluation if they viewed a certain product, or

service, as a commodity. The researcher further suggests that the high

58
level of product discounting percentages by the industry is catalyzed by

buyers’ commodity mentality.

Manufacturers offer different list prices for different product lines,

which are used based on the type of client, market, or other characteristics

of the buyer. Therefore, to make a fair evaluation using the percentage

discount approach requires that each manufacturer’s list has the exact

same breadth of line from which the discounts are based on. However,

this would be impossible to verify because each manufacturer has a

different offering and approach in delivering goods.

The researcher identified that manufacturers could gain competitive

advantage by offering larger percentage discounts, but not actually

reducing the end cost for the buyer, and thereby negating any perceived

“discount.” Manufacturers could achieve this advantage by increasing

their base list prices, which would allow them to receive the same revenue

and offer larger discounts. Owners may then perceive they are receiving

a “good price” because of high discount percentages. However, using

percentage values as a basis of financial evaluation from competing firms

or products should only be used when the evaluating entity can ensure

that the fixed base number (the denominator) represents the exact same

product from each proposer.

The University stated they use software which verifies that the

manufacturers are using their most recent list prices in their proposal.

While this software does ensure that the manufacturer is not using

59
different lists in responding to the Tri-U RFP, it would be cumbersome to

check each proposer’s list against the software. Regardless, using the

software did not address the fundamental problem of using discounting

percentages as fair and accurate evaluation mechanism. In response, the

University agreed to use a financial evaluation tool that minimized the use

of discounting percentages in the analysis, and instead focused on values

that are generally not based on discounting: the Installation and Design

Charges. Please see Chapter 4 for a detailed description of the

evaluation algorithm used.

While this algorithm was a purer evaluation of the financial

information (because it minimized the impact of product discounting

percentages), it still did not account for the actual product cost. The

evaluation committee requested that any final vendor selection must take

into account product cost. The committee made this request after

interviews (see the next subsection) were completed in May 2009, and in

response, the researcher resurfaced the idea of using typical designs.

The University requested a Financial Proposal Clarification from the

shortlisted proposers in June 2009 that included typical designs (five

months after the researcher had initially proposed this idea).

The Financial Proposal Clarification (Appendix E) included two

generic typical designs: an Executive Workstation and a Professional

Workstation. For each typical, the proposer was requested to provide

solutions in the cost categories of “Lowest”, “Mid-range”, and “Highest”,

60
along with a brief explanation of how they calculated the costs. If the

vendor did not have differentiated cost options, they only had to provide

information for the categories that applied to their internal pricing structure.

The researcher also used this opportunity to validate an earlier

claim by the University that they receive better discounts than the State of

Arizona furniture contract. If a proposer did not have a State contract,

they were not required to submit the information. Information collected

about the State contracts was used only for research purposes, and was

not used in any final vendor selection determination. Figures 3.2 and 3.3

below are samples of the templates the proposers were required to

submit.

Tri-University Contract
Financial Category Unit Lowest Cost Mid-range Cost Highest Cost
Executive Workstation Cost $
Installation Fee $ Explanation for cost calculation here
Design Fee $ Explanation for cost calculation here
Additional ASU Costs $
Additional UA Costs $
Additional NAU Costs $
Other Costs $
Total Cost $

State Contract
Financial Category Unit Lowest Cost Mid-range Cost Highest Cost
Executive Workstation Cost $
Installation Fee $ Explanation for cost calculation here
Design Fee $ Explanation for cost calculation here
Additional ASU Costs $
Additional UA Costs $
Additional NAU Costs $
Other Costs $
Total Cost $

Figure 3.2 Executive Workstation Cost Template

61
Tri-University Contract
Financial Category Unit Lowest Cost Mid-range Cost Highest Cost
Professional Workstation Cost $
Installation Fee $ Explanation for cost calculation here
Design Fee $ Explanation for cost calculation here
Additional ASU Costs $
Additional UA Costs $
Additional NAU Costs $
Other Costs $
Total Cost $

State Contract
Financial Category Unit Lowest Cost Mid-range Cost Highest Cost
Professional Workstation Cost $
Installation Fee $ Explanation for cost calculation here
Design Fee $ Explanation for cost calculation here
Additional ASU Costs $
Additional UA Costs $
Additional NAU Costs $
Other Costs $
Total Cost $

Figure 3.3 Professional Workstation Cost Template

One of the reasons that ASU used the PIPS best value process is

because it shifts the focus to the proposers’ ability to minimize risk to the

contract, instead forcing evaluators to consider voluminous amounts of

marketing information, specifications, and detailed technical information.

The researcher educated the entire process upfront with the committee,

and explained that once interviews are completed, the potential best value

firms would be invited to the Pre-Award Phase. Once interviews were

completed, some of the committee still felt uncomfortable that they would

not have a chance to review specifications or product quality information.

In fact, when the researcher questioned the committee about how they

would they would use the technical information, one member responded,

“I’ll know it when I see it. I will just know if the product is good or not.” As

a result, the University requested that the proposers also submit a

62
complete specification and pricing guide, and a narrative that identifies

how their product lines will meet the University’s need for certain furniture

categories (Classroom, Training Tables, and others described in Appendix

D). The fervor by which the committee requested the detailed information

was another indictor to the researcher that the Universities may have a

commodity mentality towards the furnishing services contract: the product

details or technical information was perceived to be more important than

the suppliers’ ability to minimize cost and schedule deviations, and

increase buyer satisfaction (as a result of minimizing these deviations).

Interviews

After the evaluation committee rated each proposer’s submittals

(RAVA and Service Proposal), the University shortlisted a total of eight

different companies: six for the Primary Award, and five for the Budget

Award. The RFP identified that the following individuals would be

interviewed from each shortlisted proposer:

• Manufacturer’s Representative

• Dealer’s Representative

• Lead Designer

• Lead Installer

The University conducted individual interviews, with a standard set of

questions for each interviewee (please see Appendix E for the interview

questions). If a manufacturer was listed by multiple dealers, they were

instructed to identify any differences in their approach or structure in

63
servicing the Universities based on which dealer they would be partnering

with. However, none of the manufacturers in this situation stated that they

would change their process based on who the dealer was.

The reader may recall that the contract awarded would allow the

dealers to perform work at Arizona’s three largest public universities. As

such, some vendors may have separate primary individuals for each

critical role at each university (for example, a separate Dealer’s

Representative for each school’s primary campus). The Universities

wanted to interview each critical role, for each university as applicable.

This would have resulted in 54 interviews of eight different companies,

requiring a total of approximately 18 hours straight of interviewing.

The Evaluation Committee was adamant about using this

approach, but the researcher felt that it incorrectly utilized the interviews in

the PIPS process. The interviews are designed to help the owner quickly

and efficiently identify the key personnel’s ability to identify and minimize

risk, and layout out a clear plan which shows that they can successfully

execute the service. Interviewing 54 people would result in a tremendous

amount of information that evaluators would somehow need to sort out to

assign their interview rating. After much cajoling by the researcher, the

University agreed to interview two critical individuals from each proposing

entity (Manufacturer’s Representative and Dealer’s Representative), for a

total of 16 interviews. The interviewees were instructed they should be

64
able familiar with each University, and know how the vendor’s service

structure may be different at each school.

At the conclusion of interviews, and in conjunction with the

additional product category information referenced in the previous

subsection, the evaluation committee assigned ratings and submitted

them to the ASU Purchasing Officer.

Prioritization

The researcher updated the vendor scores with the interview

ratings, and the University invited three firms to the Pre-Award Phase.

Once the Pre-Award announcement was made, a protest was filed by one

of the shortlisted vendors (who was not invited Pre-Award). The protest

had two points of contention: the first is that on the date and time of

proposal submission (April 6, 2009, 3:00 p.m. Mountain Standard Time),

Phoenix, Arizona was actually on Pacific Standard Time. The protestor

contended that five proposals were submitted late and should be rejected

from further consideration. However, Phoenix is always on Mountain

Standard Time, so the University denied the first point of protest. The

second point of the protest was that another proposer did not submit a

seventh copy of a proposal binder along with a CD of the Past

Performance Information. However, the RFP allows the University to, at

its sole discretion, ask the proposer for any missing information.

The protester was obviously denied on both points of contention

and the RFP evaluation process continued. It is important to note that the

65
protest did not levy any complaints about the best value process, financial

evaluation method, or any other unique component of the Tri-U RFP.

Pre-Award Phase

The PIPS best value process is unique because it contains a period

of time between identification of the potential best value vendor (selection)

and contract award for detailed preplanning and risk management

(Kashiwagi, 2012b). The time is unique because it allows the vendor

unfettered access to the client to resolve, or at least plan for, any issues

that could impact their ability to successfully deliver the contract. The

application of PIPS to the Tri-University Furniture RFP is unique because

there were two awarded contracts (Primary and Budget), with three

dealers moving forward (two dealers under the Primary, and one dealer

under both the Primary and Budget). In most PIPS projects, however, a

single contract is awarded, and only one vendor moves forward into the

Pre-Award Phase.

The vendors were required to compile a Pre-Award Document,

which consisted of four main components:

• Scope of Services – High level overview of what’s included and

what’s excluded from the contract.

• Risk Management Plan (RMP) – List of all potential risks that

the dealer does not control, clients concerns, and other vendors’

risks with a plan for how they will minimize the impact of each

risk or concern. The dealers developed a RMP that would serve

66
 as their base template for use on future Large Projects

(described below).

• Client Action Items List – Schedule of all client actions, who

needs to complete them, and when they need to be completed

by.

• Risk Reporting Structure – Finalization of Weekly Risk Reports

and other performance reporting tools.

The vendor was also required to submit any legal and other contractual

documentation.

In the Pre-Award Phase, the owner (attempts) to release control to

the expert vendor. The dealer then has the authority to set a plan to

accomplish the necessary tasks that results in a contract. If more time is

needed to properly plan, the vendor is normally allowed this time. The Tri-

University Contract Award had to be made by June 30, 2009; however,

there were several delays during the Selection Phase that reduced time

allotted for Pre-Award to 11 calendar days, from the planned 46 days.

Even for a smaller PIPS project, this was a very short time. This was a

significant risk for both the dealers and the Universities.

As discussed in the beginning of this chapter, the vendor

community as whole was amicable to using a best value approach in

establishing a furniture services contract. This same attitude was

displayed from the potential best value dealers, and after the contract was

67
signed, the dealers continued to work with the researcher to finalize their

performance reporting structure.

Phase Three: Risk Management Structure

Prior to releasing the RFP, the researcher had done a significant

amount of design and planning of a potential performance reporting

structure. As previously discussed, and shown in Figure 3.1, the existing

furniture purchasing process was totally void of performance monitoring

and risk minimization protocols. To solve this problem, the researcher

worked with the best value dealers to develop two new tools, previously

unseen in the Tri-U Contract. They are described in Table 3.4.

Table 3.4

Risk Management Tools

Risk Management Submission

No Tool Description Frequency
List of Small Projects that tracks First Friday of
Project Record List cost, schedule, client contract each month
1
(PRL) information, client satisfaction, and
any cost or schedule risks
Used on a single Large Project Friday of each
Weekly Risk Report and tracks detailed project week
2
(WRR) information, cost, schedule, risks,
and a Risk Management Plan

The updated purchasing process is described below, and is shown

in Figure 3.4.

• As in the previous RFP, the furniture purchasing process begins

with a buyer need. Regardless of the Project Type (see Table

68
 3.3 near the beginning of this chapter), the Total Projected Cost

is used to determine the Project Size.

• If the project is a Small Project, the Dealer first adds it to their

Project Record List. They will then begin work on the project

and document any risks that occur on their PRL. At the

conclusion of the project, the Dealer is responsible for collecting

a simple survey from the end client.

• If the project is a Large Project, the first, and most important

step the Dealer takes is to modify their base RMP template

(developed during the Pre-Award Phase), and ensure the client

understands the dealer’s Risk Management Plan. At the

conclusion of this initial phase, the dealer holds a Summary

Meeting with the client that recaps their RMP, the project

schedule, and action items. As the reader may have noticed,

this is in fact a smaller version of the Pre-Award Phase from the

PIPS process. After the Summary meeting, the vendor moves

forward as they normally would on a Small Project, and

document risk and client concerns through the duration of the

project. At the project conclusion, the dealer collects a more

extensive, one-page client survey.

• All client satisfaction surveys are used in the vendor’s Past

Performance Information Database.

69
 Figure 3.4 Best Value Furniture Services Purchasing Structure

The University identified that Capital Projects should be given more

attention in terms of risk management planning, due their political nature,

and potential coordination of other construction trades. Buyers from the

Capital Programs group may opt to use the PIPS process to select a

dealer (from the three Tri-U contracted dealers). If a capital project is

procured through PIPS, the dealer must prepare a risk management plan

and scope proposal (prior to project award). This applies to both small

and large projects. A small PIPS capital project will follow the same steps

outlined for regular, small projects above (a Weekly Risk Report is not

70
required). A large PIPS capital project will follow the same steps outlined

above, except that the RMP will have already been created (as part of the

requirements in PIPS).

One of the key areas that the contracted dealers wanted to address

during the Pre-Award Phase is how buyers may acquire and use designs

under the Tri-University Contract. The dealers collectively developed the

following criteria to manage project designs:

1. A buyer may request a design and quote from a single vendor

and then award to that same vendor.

2. A buyer may request designs and quotes from two, or all,

awarded vendors under the Tri-U Contract.

3. A buyer may purchase a design from one vendor, and award

the project to a different vendor

A buyer may not obtain a design and then compete that design among all

or some of the other vendors without first paying for the design. If a

vendor is provided a design developed by a different vendor, the dealer

must notify the Purchasing Officer. The Officer will then verify that the

design has been appropriately acquired by the end-user.

Best Value Information System

The performance information and risk management structure is

shown in Figure 3.5. The structure is a system-wide mechanism that

monitors each project, at each University, for each dealer. All project and

risk data becomes part of the Best Value Information System, and serves

71
the University system through the use of risk reporting tools, risk

minimization, and performance monitoring and tracking.

All dealer performance information is posted on a publically

available website that may be used by clients to identify past performance

of a supplier they are considering hiring. All of the contracted dealers are

eligible to participate on Capital and new, non-capital projects. However,

it is the selection mechanism that varies within each Project Type that

determines how a dealer may actually be selected.

Firm P

Firm S
Firm F

Firm F

Manufacturer P

Manufacturer S
Manufacturer F

PIPS
Selection

Capital Projects New, non-Capital Projects Match Existing Projects

best value user selection no decision

Best Value Information System

Weekly Reporting
Risk Minimization
Performance Tracking

Figure 3.5 Best Value Information System

72
Summary

The researcher divided this research project into three phases: (i)

identification of current conditions at the Universities; (ii) develop and

issue a best value request for proposal with the assumption the furniture

services contract is not a commodity service; and (iii), implement a

performance measurement and risk management structure for the Tri-

University furnishing services contract. As the initial 12 month research

test progressed, the researcher observed several instances that the client

may have a commodity mentality towards the selection and management

of the furniture services contract:

• A survey of the vendor community that there are factors to

consider besides price

• The traditional furniture RFP lacked evaluation criteria that

measured the proposers’ ability to identify and manage risk

• The University viewed percentage discounts an appropriate

methodology to evaluate cost. Subsequently, the industry’s

rampant use of percentage discounts may be an indicator that

clients, as a whole, perceive delivery of furniture services as a

commodity, and treat them as such (Dubbs, 1991).

• The evaluation committee insisted that they have the

opportunity to review product technical information before

identify the potential best value vendors. Recall that ASU

initially approached the researcher to implement a selection

73
process that identified expert vendors that could minimize risk

before it occurs while maintaining high customer satisfaction.

74
 Chapter 4

DATA COLLECTION

Introduction

The researcher collected various data throughout for the

compilation of this thesis. The primary sources of data were:

1. Furniture Industry Perceptions of Best Value

2. University Buyer Satisfaction Survey

3. Selection Phase Results

4. Post-award Project Performance Information

In this chapter, the data is presented chronologically with respect to when

it was collected in the test.

Furniture Industry Vendor Survey

As discussed in Chapter 3, a survey (see Appendix A) was sent to

the furniture vendor community to capture their perception of current

conditions, and to also gauge their support for a value-based approach to

the selection and management of the Tri-U Furniture contract award. The

surveys were distributed and collected via an online program called

LimeSurvey. The survey responses were collected anonymously.

Questions 2 – 11 requested a 1-10 rating, with 10 representing the “best”

or “strong agreement.” The survey also contained an open ended

response for general comments or feedback. The results are found in

Table 4.1.

75
Table 4.1

Furniture Industry Perceptions of Best Value

No Criteria Unit O D M
1 Average Number of Years in Business Years 48 31 67
A "Best Value" approach will minimize a
2 (1-10) 6.5 6.5 6.4
client's risk
3 A Best Value system is fair to the vendors (1-10) 6.7 6.9 6.4
A Best Value system favors high
4 (1-10) 7.3 7.3 7.3
performance vendors
Industry has performance problems in
5 (1-10) 5.4 5.9 4.9
terms of customer satisfaction
Vendors have the capability to implement
6 (1-10) 8.2 8.6 7.8
Best Value practices
Performance information should be used
7 (1-10) 7.1 7.8 6.3
much more
Traditional award processes do not
8 (1-10) 5.3 4.6 6.1
motivate higher performance
Industry is in need of a better contracting
9 (1-10) 7.0 6.8 7.2
(vendor selection) procedure
Using best value procurement will improve
10 (1-10) 6.0 5.5 6.4
the quality of vendors
Overall performance of the furniture
11 (1-10) 6.6 5.8 7.5
services industry
12 Total number of surveys completed # 25 13 12
Note: O = Overall score, D = Dealer, M = Manufacturer

The survey was distributed after an educational session on best

value. The vendors were permitted to send the survey to individuals that

did not attend the meeting; however, only 15 percent of the respondents

did not attend the session. The first group of questions (“Background

Information”) collected some basic information on the respondents, and

was used to identify if there were any trends in answers based on the

respondents' backgrounds (which there was not). The next group of

questions (“Best Value Perceptions”) was used to estimate overall support

of the new approach from the vendor community. If the vendors initially

76
showed high support for a best value system, but later objected, the

survey results could be used by the University to support justification of

their decision to use best value on the selection. Finally, the third group of

questions (“Furniture Services Industry Perceptions”) was used for the

collection of information on the perceived level of commoditization of the

furniture industry.

University Buyer Satisfaction Survey

Approximately three weeks after distribution of the vendor survey,

the researcher surveyed furniture buyers from each of the three

Universities. The buyer contact information was provided by the main

purchasing agent at each University. The survey responses were

collected through a website. The survey form can be found in Appendix B.

While the researcher had the respondents’ background information, the

results were not correlated to a specific person; in essence, the buyer

survey was also anonymous. The results from the buyer survey are found

in Table 4.2 below.

Lines 1 – 14 are simple averages of the responses. Questions 1

and 2 from the client survey were asked to identify the current level of

performance, and were also used to compare performance under the best

value Tri-U furniture contract. Questions 3 – 11 are the same questions

from the Past Performance Information surveys used in the selection

phase, and collectively identify the overall performance of the vendor.

Finally, Questions 12 – 14 provide information on overall past project

77
performance (since the Universities did not have a system in place to track

this type of information). Questions 1 through 10 were 1-10 responses,

with 10 representing the best (or strongly agree). The respondents were

requested to estimate the percentage of projects applicable as defined

questions 11 – 14.

78
Table 4.2

University Buyer Satisfaction Survey

No Criteria Unit O ASU NAU UA

Overall satisfaction with the
1 (1-10) 7.2 7.7 6.1 7.8
furniture delivery service
2 Effort spent managing the dealer (1-10) 5.0 5.2 5.7 4.3

Ability to manage the project cost

3 (1-10) 7.0 7.3 5.4 8.1
(minimize change orders)
Ability to maintain project
4 schedule (complete on-time or (1-10) 6.9 6.7 6.0 7.8
early)
5 Quality of workmanship (1-10) 7.7 7.7 7.4 8.0
Professionalism and ability to
6 (1-10) 6.8 7.3 6.2 6.7
manage
7 Close out process (1-10) 6.9 7.1 6.7 7.0
Communication, explanation of
8 (1-10) 6.7 6.7 6.6 6.7
risk, and documentation

Ability to follow the users' rules,

9 (1-10) 7.0 7.7 6.4 7.0
regulations, and requirements

Overall customer satisfaction and

10 (1-10) 7.1 7.4 6.1 7.8
comfort level in hiring again
Percent customers satisfied with
11 % 77% 89% 50% 91%
dealer
Percent of projects completed on-
12 % 76% 73% 63% 91%
time
Percent of the final product(s)
13 % 88% 94% 80% 91%
matched your initial expectations
Percent of products were
14 % 9% 9% 14% 5%
damaged upon delivery
Total number of different dealers
15 # 3 3 3 1
surveyed
Total number of different
16 # 29 8 10 11
customers surveyed
17 Total number of different surveys # 31 10 10 11
Note: O = Overall rating

Table 4.3 below presents a summary comparison of the initial buyer

survey, and the best value survey ratings.

79
Table 4.3

Summary of University Performance Differential

Performance
No Criterion Unit Overall ASU NAU UA
Baseline Overall
1 1-10 7.0 7.2 6.4 7.4
Performance
Best Value Overall
2 1-10 9.3 9.3 9.2 9.2
Performance
Baseline
3 % 77% 89% 50% 91%
Satisfaction
Best Value
4 % 99% 100% 100% 98%
Satisfaction

Selection Phase Results

Data for the Selection Phase came from two sources: the initial

evaluation of all responsive proposers, and the final evaluation model.

The initial evaluation model consists of three primary components. One

component is a financial analysis that consists of the average Install and

Design Fees for each proposer. The Universities used the following

algorithm to calculate the Fees:

1. Assume a total product base cost of $50,000. This value was

arbitrarily chosen by the Universities because it approximately

represented the average size of a Capital project.

2. Determine if the proposer listed their “product discount”,

“installation”, and “design” values as percentages of the “list” or

“net” product base cost.

80
a. If the values are based on “list” cost, the Universities

would:

i. Multiply the “installation percentage” by the

“undiscounted product base cost” (which was

always $50,000). The resultant value is the

“installation fee” (expressed as dollars).

ii. Multiply the “design percentage” by the

“undiscounted product base cost” (which, again,

was always $50,000). This value is the “design

fee” (expressed as dollars).

b. However, if the values are based on “net” cost, the

University would:

i. Calculate the “discounted product base cost” by

multiplying the “total product base cost” ($50,000)

by the “discount off list percentage”, and subtract

this value from the “total product base cost”. This

result is the “discounted product base cost.”

ii. Multiply the “installation percentage” by the

“discounted product base cost.” This is the

“installation fee” (in dollars).

iii. Multiply the “design percentage” by the

“discounted product base cost”. This is the

“design fee” (in dollars).

81
 3. Sum the “installation fee” and the “design fee.” This value is the

“Total Installation and Design Fee.”

4. If a proposer offered multiple product categories, steps one

through three were repeated for each product category. The

final number used in the evaluation model would be the average

of the “Total Installation and Design Costs” for each product

category (or, just the single “Total Installation and Design Costs”

figure if the proposer did not offer multiple product categories.)

The University summed the “installation fee” and “design fee” for

the evaluation model because one fee did not hold more importance than

the other. If one of the values did have more importance, the University

could have used each cost independently in the model, and used different

weights that reflected the Universities’ preferences. The detailed initial

financial analyses are found in Tables 4.4 and 4.5.

For example, consider the total installation and design fees for Firm

F from the Primary Award group ($1,750). Assuming a total project cost of

$50,000, the Installation Fee would be $50,000 * 2.7 percent = $1,350.

Likewise, the Design Fee would be $50,000 * 0.8 percent = $400. Thus,

summing these two fees, $1,350 + $400 = $1,750. If a firm listed their

cost as Net, the University first calculated the discounted product cost,

and set it as the base (instead of $50,000). So, for example, Firm G’s,

from the budget award, Total Fee is $50,000 – ($50,000 * 59.7 percent) =

$20,150 and then ($20,150 * 15.0 percent) + ($20,150 * 0.0 percent) =

82
$3,023. Note that some of the manufacturers listed multiple product lines,

so the values in Tables 4.5 and 4.5 are averages, and thus, the Total Fees

may not always equal the calculated values of the Average Design and

Installation Fee percentages listed. The results are shown on line 1 the

initial evaluation models (Tables 4.7 and 4.8).

Table 4.4

Initial Financial Evaluation – Primary Award

Price Average Average Average

List Product Installation Design Total
Proposer Method Discount % Fee % Fee % Fees1
A List 61.0% 3.0% 2.0% $2,500
B List 59.4% 4.5% 1.8% $3,125
F List 62.5% 2.7% 0.8% $1,750
H Net 64.4% 7.3% 1.0% $1,432
J List 59.8% 5.0% 2.0% $3,500
P List 64.1% 5.0% 2.0% $3,500
S List 70.5% 5.0% 3.5% $4,250
Overall N/A 63.3% 4.6% 1.4% $2,239
1
Sum of the average of all installation and design fees.

83
Table 4.5

Initial Financial Evaluation – Budget Award

Average Average Average

Price List Product Installation Design Total
Proposer Method Discount % Fee % Fee % Fees1
A List 47.0% 0.0% 0.0% $0
E List 55.0% 5.0% 0.0% $2,500
F List 62.0% 2.5% 1.0% $1,750
G Net 59.7% 15.0% 0.0% $3,023
J List 59.7% 5.0% 2.0% $3,500
K Net 55.7% 10.0% 0.0% $2,217
L Net 62.0% 9.0% 0.0% $1,710
N List 64.0% 4.5% 1.8% $3,125
R List 59.0% 5.0% 0.0% $2,500
Overall N/A 56.9% 6.1% 0.5% $2,251
1
Sum of the average of all installation and design fees.

A second component of the initial evaluation was the RAVA Plan

and Service Proposal ratings (please see Chapter 3 for a description of

these submittals). The researcher compiled a brief online educational

video for the committee that covered the PIPS best value system, and the

rating process (see Appendix F for a copy of the slides that were

presented). All committee activities which required a rating were rated on

a scale of 1-10, with 10 being the best and 1 being the worst. The

evaluators were advised that their ratings should be relative to the other

Proposers’ submittals (not a ranking approach). As such, any Proposer

that submitted for both awards was to be considered in relation to the

other proposers within their respective award group. For the RAVA Plan,

the committee was instructed to rate the Risk Assessment, Value Added,

and Transition Milestone Plan (see Appendix F for a copy of the

84
evaluation form). The Service Proposal contained only a rating for the

service proposal itself (see Appendix H for a copy of the evaluation form).

The average committee evaluation scores are shown in lines 2 and 3 of

Tables 4.7 and 4.8.

The researcher categorized all of the proposers’ risks, which are

shown in Table 4.6. These results are also in agreement with Goldsby

and Rao’s (2009) classification of risks (see Chapter 2), in that the actual

aesthetic characteristics of a specific product is not a significant supply

chain risk.

Table 4.6

Summary of All Proposers' Risk Categories

No Risk Category Percentage of Risks

1 Supply Chain 21.9%
2 Other Trades 19.2%
3 Site Access 12.3%
4 Unforeseen 12.3%
5 Purchasing / Budgets 11.0%
6 Other 6.8%
7 Actual Field Conditions 6.8%
8 Customer Satisfaction 6.8%
9 Product Change 2.7%

The third and final component of the initial evaluation model was

the PPI scores. The following components were required to submit PPI:

Manufacturer’s Representative, Dealer’s Representative, Lead Designer,

and the Lead Installer. The PPI scores were averages of the customer

survey submitted by the Proposers. The scores, shown on lines 4 – 7 in

Tables 4.7 and 4.8, are an average of each question asked on the survey
85
from all surveys received. The evaluation model also considered the

number of surveys that were submitted, which are shown on lines 8 – 11.

Please refer to Appendix C to review a copy of the PPI survey.

86
 Table 4.7

Primary Award Evaluation, Raw Data

No Criteria Weight Unit A B F H J P S

Install and
1 15 $ $2,500 $3,125 $1,750 $1,432 $3,500 $3,500 $4,250
Design Fees
2 RAVA Plan 25 1-10 6.0 6.0 7.1 6.6 6.3 6.5 7.6
Service
3 15 1-10 6.1 6.3 7.8 6.4 7.6 7.1 7.9
Proposal
4 PPI – LI 2.25 1-10 10.0 9.7 9.8 9.9 5.0 10.0 10.0
5 PPI – LD 2.25 1-10 10.0 9.7 9.7 9.5 5.0 10.0 10.0
6 PPI – D 2.25 1-10 10.0 9.5 9.7 9.9 9.7 10.0 10.0
7 PPI – M 2.25 1-10 9.9 9.9 9.5 9.4 9.8 10.0 10.0
8 PPI - # LI 0.25 # 4.0 6.0 7.0 8.0 1.0 10.0 10.0
9 PPI - # LD 0.25 # 4.0 10.0 9.0 10.0 1.0 10.0 10.0
10 PPI - # D 0.25 # 10.0 10.0 10.0 10.0 10.0 10.0 10.0
87

11 PPI - # M 0.25 # 7.0 10.0 10.0 4.0 10.0 5.0 10.0

Financial
12 15 $ $7,191 $7,670 $5,879 $6,756 N/A $7,945 $6,519
Clarification
13 Interview – D 17.5 1-10 5.2 6.9 8.6 4.1 N/A 6.8 8.0
14 Interview – M 17.5 1-10 5.1 6.0 8.5 4.8 N/A 6.4 7.0
Note: LI = Lead Installer, LD = Lead Designer, D = Dealer’s Representative, and M = Manufacturer’s
Representative

87
 Table 4.8

Budget Award Evaluation, Raw Data

No Criteria Weight Unit A B E F G J K L R

Install and
1 15 $ $0 $3,125 $2,500 $1,750 $3,022 $3,500 $2,217 $1,710 $2,500
Design Fees
2 RAVA Plan 25 1-10 6.0 6.0 5.6 7.1 5.7 6.3 5.9 6.1 6.6
Service
3 15 1-10 6.1 6.3 6.0 7.8 5.3 7.6 7.3 7.3 7.3
Proposal
4 PPI – LI 2.25 1-10 10.0 9.7 9.7 9.8 5.0 5.0 10.0 9.5 10.0
5 PPI – LD 2.25 1-10 10.0 9.7 9.9 9.7 5.0 5.0 10.0 9.7 10.0
6 PPI – D 2.25 1-10 10.0 9.5 9.9 9.7 9.8 9.7 10.0 9.7 10.0
7 PPI – M 2.25 1-10 9.9 9.9 9.9 9.5 5.0 9.8 10.0 9.8 10.0
8 PPI - # LI 0.25 # 4.0 6.0 2.0 7.0 1.0 1.0 10.0 7.0 10.0
9 PPI - # LD 0.25 # 4.0 10.0 6.0 9.0 1.0 1.0 10.0 7.0 10.0
10 PPI - # D 0.25 # 10.0 10.0 10.0 10.0 10.0 10.0 10.0 7.0 10.0
88

11 PPI - # M 0.25 # 7.0 10.0 10.0 10.0 1.0 10.0 8.0 6.0 10.0
Financial
12 15 $ $5,470 N/A N/A $5,997 N/A N/A $5,856 $7,274 $6,519
Clarification
13 Interview–D 17.5 1-10 4.5 N/A N/A 8.6 N/A N/A 7.0 4.9 7.5
14 Interview–M 17.5 1-10 4.9 N/A N/A 8.9 N/A N/A 6.6 5.1 5.6
Note: LI = Lead Installer, LD = Lead Designer, D = Dealer’s Representative, and M = Manufacturer’s
Representative

88
 Once all of the information was compiled, the University shortlisted

six proposers from the Primary Award group, and five proposers from the

Budget Award group. Once the shortlisting was complete, the selection

process entered the second phase, which consisted of a more detailed

financial evaluation and interviews. Recall that the initial financial

evaluation did not account for the actual cost of product, nor was the

financial evaluation process clearly explained to the proposers prior to

submission. The University issued a clarification that requested

information on cost for product cost (see Chapter 3 and Appendix D). The

vendors were requested to submit pricing for an Executive Workstation

and Professional Workstation based on typical designs provided in the

clarification document. Each proposer was requested to submit costs for

low-, mid-, and high-end furniture solutions (as applicable). Each

proposer provided a low-end furniture system, however not all Proposers

provided information for mid-, and high-end systems. Therefore, to have a

comparable baseline cost, the University only considered the low-end

systems in the financial evaluation. The proposers’ also submitted

information on their systems’ cost differential from the State of Arizona

furniture contract if they had one. The costs for the low-end proposals are

shown in Tables 4.9 and 4.10.

89
Table 4.9

Financial Proposal Clarification (Low-End) – Primary Award

% Difference
Executive Professional from State
Proposer Workstation Workstation Total Cost Contract1
A $4,195.96 $2,994.89 $7,190.85 -1.0%
B $4,400.11 $3,270.18 $7,670.29 N/A
F $3,453.08 $2,426.35 $5,879.43 -16.2%
H $3,989.99 $2,765.63 $6,755.62 N/A
P $4,749.68 $3,195.57 $7,945.25 -8.4%
S $3,820.79 $2,697.89 $6,518.68 -20.2%
Average $4,101.60 $2,891.75 $6,993.35 -11.5%
1
Average of Executive and Professional Workstation % differential

Table 4.10

Financial Proposal Clarification (Low-End) – Budget Award

% Difference
Executive Professional from State
Proposer Workstation Workstation Total Cost Contract1
A $3,237.00 $2,233.00 $5,470.00 N/A
F $3,570.16 $2,426.35 $5,996.51 -15.4%
K $3,418.97 $2,436.89 $5,855.86 -1.0%
L $4,086.50 $3,187.27 $7,273.77 N/A
R $3,820.79 $2,697.89 $6,518.68 -20.2%
Average $3,626.68 $2,596.28 $6,222.96 -12.2%
1
Average of Executive and Professional Workstation % differential

The second part of the final evaluation phase was interviews. The

University interviewed the Manufacturer’s Representative and the Dealer’s

Representative for each proposer. Please see Appendix F for a list of the

interview questions. In the situation where a Manufacturer’s

Representative was used by multiple Dealers, the interviewees were

asked if any of their responses changed based on which dealership they

were partnering with. The interviews required approximately two full days
90
of time from the evaluation committee. The committee was instructed to

rate the interviews in the same manner as the RAVA Plan and Service

Proposal: on a 1-10 scale and relative to the other interviewees. The

average interview ratings are shown on lines 13 – 14 in Tables 4.7 and

4.8.

In short, Firm F performed particularly well as compared to the

other proposers. Tables 4.11 and 4.12 below present different

perspectives of the raw data to highlight the differentials of Firm F. These

items are further discussed in Chapter 5.

Table 4.11

Primary Award Evaluation, Comparisons of Raw Data

Awarded All
Dealers Proposers
No Criteria Firm F (no Firm F) (no Firm F)
1 Install and Design Fees $1,750 $3,875 $3,051
2 RAVA Plan 7.1 7.1 6.5
3 Service Proposal 7.8 7.5 6.9
4 PPI – LI 9.8 10.0 9.1
5 PPI – LD 9.7 10.0 9.0
6 PPI – D 9.7 10.0 9.8
7 PPI – M 9.5 10.0 9.8
8 PPI - # LI 7.0 10.0 6.5
9 PPI - # LD 9.0 10.0 7.5
10 PPI - # D 10.0 10.0 10.0
11 PPI - # M 10.0 7.5 7.7
12 Financial Clarification $5,879 $7,232 $7,216
13 Interview – D 8.6 7.4 6.2
14 Interview – M 8.5 6.7 5.9
Note: LI = Lead Installer, LD = Lead Designer, D = Dealer’s
Representative, and M = Manufacturer’s Representative

91
Table 4.12

Budget Award Evaluation, Comparisons of Raw Data

All Proposers (no

No Criteria Firm F Firm F)
1 Install and Design Fees $1,750 $2,322
2 RAVA Plan 7.11 6.02
3 Service Proposal 7.78 6.67
4 PPI – LI 9.85 8.60
5 PPI – LD 9.74 8.67
6 PPI – D 9.73 9.82
7 PPI – M 9.48 9.28
8 PPI - # LI 7 5
9 PPI - # LD 9 6
10 PPI - # D 10 10
11 PPI - # M 10 8
12 Financial Clarification $5,997 $6,280
13 Interview – D 8.56 5.99
14 Interview – M 8.94 5.55
Note: LI = Lead Installer, LD = Lead Designer, D = Dealer’s
Representative, and M = Manufacturer’s Representative

After the interviews were completed, the University invited Firms F,

P, and S to the Primary Pre-Award Phase, and Firm F to the Budget Pre-

Award Phase. After successful completion of the Pre-Award Phase, these

three firms were awarded contracts.

Project Performance Information

All post-award performance information comes from either the

Project Record Lists (PRL) or the Weekly Risk Reports (WRR) (see Table

3.4 in Chapter 3 for a detailed description). These tools collect a large

amount of project data, including award information, customer satisfaction,

cost deviation, and schedule deviation; in fact one individual PRL report

provides 51 different data points, and the WRR reports contains 120

92
different data points. Note that all data from the Post-Award is current as

of January 2012. All cost and schedule deviations (or “risks”) are

attributed to one of four major categories:

1. Client – the entity directly purchasing the furniture (i.e., the

department) or the some other group part of the entity’s

organization (i.e., university purchasing department)

2. Designer – the architect / engineering firm. Designers are

usually only present on large capital construction projects. This

is different from the normal design services that a dealer would

provide (deviations in this area would be under the ‘Dealer’

category).

3. Dealer – the contracted Tri-U dealer or any of their supporting

vendors and manufacturers.

4. Unforeseen – site or project events that are reasonably

expected to not be identified prior to starting the project (i.e.,

catastrophic event).

Table 4.13 presents the total delivery volume by dealer. Line one is

the total number of completed projects by the dealer and line two is the

sum of the final project cost for these projects (expressed in millions of

dollars). Line three is the total cost of all completed projects (line two)

divided by the total number of projects completed (line one).

93
Table 4.13

Summary of Delivery Volume by Dealer

No Criteria Firm F Firm P Firm S Overall

1 Total Number of
684 76 355 1,115
Delivered Projects
2 Total Awarded Cost
$16.4 $1.0 $1.8 $19.3
($M)
3 Average Awarded
$24,048 $13,336 $5,201 $17,310
Cost

Table 4.14 is a summary of the schedule deviations on all

completed projects, both large and small. The schedule changes are

calculated by summing all of a particular schedule category’s deviations

(increases or decreases) and dividing by the total sum of the duration for

all projects. The overall deviation rate is calculated by summing all of the

schedule deviations and dividing by the total duration for all projects. For

example, a 10 percent schedule deviation (or delay) on a 100 day project

indicates that the project was delayed by 10 days (10 days delayed

divided by 100 days in original project duration = 10 percent).

Table 4.14

Project Schedule Deviation Summary

Cost Deviation
No Source Firm F Firm P Firm S Overall
1 Client 3.4% 0.0% 7.1% 3.4%
2 Designer 0.0% 0.0% 0.0% 0.0%
3 Dealer 1.6% 3.5% 24.8% 5.0%
4 Unforeseen 0.0% 1.9% 0.0% 0.3%
5 Overall 4.9% 5.5% 31.9% 8.6%

94
 Table 4.15 is a summary of the cost deviations on all completed

projects, both large and small. Similar to the schedule deviation

calculations, the values are calculated by summing all of a particular cost

category’s deviations (increases or decreases) and dividing by the total

sum of the awarded cost for all projects. The overall deviation rate is

calculated by summing all of the cost deviations and dividing by the total

awarded cost for all projects.

Table 4.15

Project Cost Deviation Summary

Cost Deviation
No Source Firm F Firm P Firm S Overall
1 Client 0.068% 0.018% -0.074% 0.058%
2 Designer 0.068% 0.000% -0.080% 0.057%
3 Dealer 0.000% 0.000% 0.000% 0.000%
4 Unforeseen 0.000% 0.018% 0.006% 0.001%
5 Overall 0.000% 0.000% 0.000% 0.000%

95
 Chapter 5

DATA ANALYSIS

Introduction

This chapter presents a synopsis of how the data was analyzed.

The primary sources of data were:

5. Furniture Industry Perceptions of Best Value

6. University Buyer Satisfaction Survey

7. Selection Phase Results

8. Project Performance Information

Furniture Industry Perceptions of Best Value

The overall average of responses to the furniture industry survey

was 6.6 (out of 10). The responses to Question 6 (“Vendors have the

capability to implement Best Value practices”) received the highest level of

agreement at 8.2. Questions 5 (“Industry has performance problems in

terms of customer satisfaction”) and 8 (“Traditional award processes do

not motivate higher performance”) received the least amount of agreement

at 5.4 and 5.3, respectively. These responses indicated that the industry

may have perceived that the clients’ current procurement processes were

acceptable (Question 5 and 8), but the vendor community also identified

that it had the ability to succeed in a best value environment (Question 6).

However, the overall performance of the furniture industry (Question 11)

was rated at 6.6. The mean,‫ݕ‬ത, of the overall averages per question was

6.608, and the standard deviation, σ, of the overall averages per question

96
was 0.874. 1σ below ‫ݕ‬ത was 5.734, and 1σ above ‫ݕ‬ത was 7.482. Note that

these same questions (5, 6, and 8) were outside of this 1σ range.

Furniture Industry Perceptions of Best Value Two Sample Pooled T-test

The researcher conducted a t-test of the Furniture Industry survey

to identify if there was a significant difference in responses between

dealers and manufacturers. Table 5.1 presents the two-tailed P-value for

each question. The alpha benchmark α = 0.05, d.f. = 23, t-Critical one-tail

= 1.714, and, t-Critical two-tail = 2.069.

H0: µ1 - µ2 = 0; H1: µ1 - µ2 ≠ 0

µ1 = dealer’s responses (per question)

µ2 = manufacturer’s responses (per question)

The p-value for each question was above the α = 0.05 value, with

the exception of question 11. Therefore, the null hypothesis could not be

confidently rejected for questions 2 – 10. However, the null hypothesis

was rejected for question 11: the individual dealer and manufacturer

perceptions of overall industry performance were significantly different.

97
Table 5.1

T-Test of Furniture Industry Perceptions of Best Value

Pooled P(T<=t) P(T<=t)

No Criteria Variance t-Stat one-tail two-tail
A "Best Value" approach will
1 5.832 0.126 0.450 0.901
minimize a client's risk
A Best Value system is fair
2 8.602 0.431 0.335 0.670
to the vendors
A Best Value system favors
3 7.975 -0.023 0.491 0.982
high performance vendors
Industry has performance
4 problems in terms of 5.732 1.050 0.152 0.305
customer satisfaction
Vendors have the capability
5 to implement Best Value 4.406 1.030 0.157 0.314
practices
Performance information
6 4.825 1.633 0.058 0.116
should be used much more
Traditional award processes
7 do not motivate higher 6.521 -1.436 0.082 0.164
performance
Industry is in need of a better
8 contracting (vendor 7.624 -0.290 0.387 0.774
selection) procedure
Using best value
9 procurement will improve the 7.919 -0.780 0.222 0.444
quality of vendors
Overall performance of the
10 3.970 -2.170 0.020 0.041
furniture services industry
Note: O = Overall score, D = Dealer, M = Manufacturer

A compilation of selected vendor survey comments, shown in Table

5.2, offered some insight to explain the differing perception levels of

industry performance:

• As Kashiwagi (2012a) identified, the Owner has proliferated the

use of a low-price award process to acquire services.

Consequently, the value of true expertise has been minimized.

98
 The researcher has previously identified this behavior as a

“commodity mentality.”

• The dealer was the primary contact for a vast majority of

furniture projects within the Tri-University system. As such, they

were the first-line interaction of the “low-price” mentality from

owners. In response, the dealers commoditized their product

(and services). The focus on price therefore reduced the

expertise dealers can offer and decreases overall industry

performance (from the perspective of a dealer) (Kashiwagi,

2012a).

• The dealers were the distributors of the manufacturer’s product

and may have limited the amount of interfacing between the

manufacturer and end-client. The researcher proposed that this

abstraction from field interaction may have altered the

manufacturer’s perspective of industry performance.

Alternatively, manufacturers may have understood “industry

performance” to mean something different from the dealer’s

understanding of the term.

In summary, a majority of industry survey responses, on an

individual question-level basis, did not show any significant differential

between dealers and manufacturers. The reader may then conclude that

the overall averages (Table 4.1) are generally representative of the

sample as a whole.

99
Table 5.2

Selected Furniture Industry Survey Vendor Comments

Dealer Comments Manufacturer Comments

• “They [manufacturers] will only give
special pricing to their favorite
dealers based on current
contracts.”
• “The relationship based process is
not the issue with the furniture
industry, the issue is the continued
desire of many customers to keep
pushing the cost lower and not
valuing the services…”
• “…all long term agreements need
to have relationships to be
sustainable.”
• “…service was not delivered - we
have turned office furniture into a
commodity…”
• “…there are dealers in town who
will do or say anything to make a
deal…”
• “…overall principle of letting the
experts lead is refreshing.”
• “Dealers sometime block
communication from the school”
• “…allow the manufacturer to
communicate directly with the
school”
• “The school must find a way to
determine the real value the dealer
provides.”
• “Manufacturers do not have the
capability to implement best value
practices because they do not
control the design, planning,
ordering, install and evaluation
processes.”
• “…too much importance allocated
to the dealer "process" and not the
merits of individual maunufacturers
[sic] products.”

University Buyer Satisfaction Survey

There are several points to note in the average response ratings to

the Initial Buyer Survey (found in Chapter 4, Table 4.2). First, the

performance-related responses (Questions 1 – 14) for NAU were lower for

every question. The NAU satisfaction with the dealer was 40 percent

lower than the combined ASU and UA average satisfaction rate; NAU’s

percent of projects completed on-time was reported to be 19 percent less

than the combined ASU and UA average; and 12.5 percent fewer of

NAU’s final furniture products matched the initial expectations, as

compared to the ASU and UA combined average. The overall average of

100
the performance criteria (Questions 3 – 10) was 7.2, 6.4, and 7.4 for ASU,

NAU, and UA, respectively.

University Buyer Satisfaction Survey: ANOVA and t-test (Initial Survey)

The averages indicated that there may be differing levels of

performance at each institution. The researcher then conducted a single-

factor ANOVA (analysis of variance) of the performance-related responses

(Questions 3 – 10 from the initial buyer survey) for ASU, NAU, and UA.

The α = 0.05. The results are shown below in Table 5.3.

H0: µ1 - µ2 - µ3 = 0; H1: µ1 - µ2 - µ3 ≠ 0

µ1 = ASU’s responses (all questions)

µ2 = NAU’s responses (all questions)

µ3 = UA’s responses (all questions)

The null hypothesis was rejected, because the F-value (4.359) was

greater than the F-critical value (3.035). This indicated that, from an

overall perspective, there were significant levels of variation for overall

performance at each University.

101
Table 5.3

ANOVA ASU, NAU, UA Initial Buyer Survey Responses

Sum of Mean
Squares df Square F F-critical
Between Groups 50.045 2 25.022 4.359 3.035
Within Groups 1320.152 230 5.740
Total 1370.197 232

The researcher conducted a follow-up t-test, by combining the ASU

and UA performance responses, and comparing to the NAU responses.

The results are shown in Table 5.4. The α = 0.05.

H0: µ1 - µ2 = 0; H1: µ1 - µ2 ≠ 0

µ1 = ASU’s and UA’s combined responses (all questions)

µ2 = NAU’s responses (all questions)

The null hypothesis was rejected, because the two-tail p-value

(0.0040) was less than α benchmark of 0.05. The implication was that the

level of overall performance at NAU was significantly different (lower) than

the average ASU and UA performance level.

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 Table 5.4

T-test of ASU,UA and NAU, Initial Buyer Survey

ASU,UA NAU
Mean 7.329 6.353
Variance 3.866 9.661
Observations 158 75
Pooled Variance 5.722
Hypothesized Mean Difference 0
df 231
t Stat 2.909
P(T<=t) one-tail 0.002
t Critical one-tail 1.651
P(T<=t) two-tail 0.004
t Critical two-tail 1.970

NAU is a relatively remote campus, which serves a student

population that is 62 percent smaller than the average ASU and UA

population (see Table 1.1 in Chapter 1). The NAU student population is

39 percent the size of its host city (Flagstaff), compared to the 7 percent

that ASU (Phoenix) and UA (Tucson) comprise. In other words, the

potential for additional work outside of the University system is much more

limited in a remote location such as Flagstaff. Therefore, the furniture

industry’s presence, and capabilities, may be limited in that region.

University Buyer Satisfaction Survey: ANOVA and t-test (Best Value)

The researcher then completed an ANOVA and a t-test using the

same approach as the initial buyer survey analyses. The results are

shown in Table 5.5 below. The α = 0.05.

H0: µ1 - µ2 - µ3 = 0; H1: µ1 - µ2 - µ3 ≠ 0

µ1 = ASU’s responses (all questions)

103
 µ2 = NAU’s responses (all questions)

µ3 = UA’s responses (all questions)

The F-value (0.300) was less than the F-critical (3.066), and

therefore the null hypothesis could not be rejected. Under the value-

based structure system, there did not seem to be a significant level of

performance variation at each University.

Table 5.5

ANOVA of ASU, NAU, UA, Best Value Buyer Survey

Sum of Mean
Squares df Square F F-critical
Between Groups 0.604 2 0.302 0.300 3.066
Within Groups 129.878 129 1.007
Total 130.482 131

While not necessary, the researcher conducted a post-hoc t-test

between the ASU, UA and NAU overall performance levels under the best

value system. The results of this t–test are shown in Table 5.6 below. The

α = 0.05.

H0: µ1 - µ2 = 0; H1: µ1 - µ2 ≠ 0

µ1 = ASU’s and UA’s combined responses (all questions)

µ2 = NAU’s responses (all questions)

The two-tailed p-value was 0.898, which is greater than the α =

0.05 benchmark. Therefore, the null hypothesis cannot be rejected (unlike

the initial buyer survey’s t-test of ASU,UA and NAU). This result suggests

104
that the performance differential between ASU, UA and NAU was not

significant under the best value system.

Table 5.6

T-test of ASU,UA and NAU Buyer Responses, Best Value System

ASU,UA NAU
Mean 9.268 9.241
Variance 1.070 0.761
Observations 103 29
Pooled Variance 1.004
Hypothesized Mean Difference 0
df 130
t Stat 0.128
P(T<=t) one-tail 0.449
t Critical one-tail 1.657
P(T<=t) two-tail 0.898
t Critical two-tail 1.978

Finally, the researcher conducted three separate t-tests, comparing

the initial buyer surveys results against the best value overall buyer

performance ratings. These t-test results are shown below in Tables 5.7,

5.8, and 5.9. The α = 0.05.

H0: µ1 - µ2 = 0; H1: µ1 - µ2 ≠ 0

µ1 = ASU’s and UA’s combined responses (all questions)

µ2 = NAU’s responses (all questions)

The two-tail p-values were 4.78251E-15, 3.38446E-06, and

1.07341E-06, and for ASU, NAU, and UA respectively. Consequently, the

null hypotheses for each University’s t-test were rejected, indicating that

105
there was significant performance differential between the existing

environment (before best value) and the new environment.

Table 5.7

T-Test of ASU Buyer Responses

Initial Best Value

Mean 7.228 9.339
Variance 2.383 1.060
Observations 79 55
Pooled Variance 1.842
Hypothesized Mean Difference 0
df 132
t Stat -8.857
P(T<=t) one-tail 2.39E-15
t Critical one-tail 1.656
P(T<=t) two-tail 4.78E-15
t Critical two-tail 1.978

Table 5.8

T-Test of NAU Buyer Responses

Initial Best Value

Mean 6.353 9.241
Variance 9.661 0.761
Observations 75 29
Pooled Variance 7.218
Hypothesized Mean Difference 0
df 102
t Stat -4.916
P(T<=t) one-tail 1.69E-06
t Critical one-tail 2.363
P(T<=t) two-tail 3.38E-06
t Critical two-tail 2.625

106
 Table 5.9

T-Test of UA Buyer Responses

Initial Best Value

Mean 7.169 9.188
Variance 6.385 1.092
Observations 59 48
Pooled Variance 4.015
Hypothesized Mean Difference 0
df 105
t Stat -5.181
P(T<=t) one-tail 5.37E-07
t Critical one-tail 1.659
P(T<=t) two-tail 1.07E-06
t Critical two-tail 1.983

University Buyer Satisfaction Survey: Initial Survey vs. Best Value

The researcher also conducted a t-test with all data points from

existing environment versus the best value system. The results are

shown in Table 5.10. The α = 0.05.

H0: µ1 - µ2 = 0; H1: µ1 - µ2 ≠ 0

µ1 = Buyer’s survey responses of existing system (all questions)

µ2 = Buyer’s survey responses in best value(all questions)

The two-tailed p-value is 1.84E-21, which was far below the α =

0.05. Therefore, the null hypothesis was rejected, and indicated that there

was a significant difference in terms of overall performance between the

existing environment and best value environment. Overall performance

ratings increased 24.3 percent from the initial buyer survey, to the best

value system.

107
 Table 5.10

T-Test of Initial and Best Value Buyer Responses

Initial Best Value

Mean 7.015 9.262
Variance 5.906 0.996
Observations 233 132
Pooled Variance 4.134
Hypothesized Mean Difference 0
df 363
t Stat -10.146
P(T<=t) one-tail 9.20E-22
t Critical one-tail 1.649
P(T<=t) two-tail 1.84E-21
t Critical two-tail 1.967

Selection Phase Results

There were two main types of data used in the Evaluation Model:

evaluation committee ratings, and raw data. The rated information

consisted of the Interview, RAVA Plan, and Service Plan. The raw data

consisted of the Cost Proposal and the PPI information. Once the

evaluation committee rated the plans and interviews, the Purchasing

Officer determined an overall score by averaging each committee

member’s scores for a particular evaluation criterion.

The University used a linear relationship evaluation model which

divided each proposer’s score by the best score for each factor. The

proposer’s score for a factor was calculated by multiplying their ratio (to

the best score) by the weight for that particular category. Each proposer’s

individual points (for each factor) were then summed to determine each

proposer’s total points. Tables 5.15 and 5.16 show the point differential

108
between the best score for a particular evaluation factor and the

proposer’s individual score for that factor.

The average product discount, installation fee, and design fee,

along with the standard deviations, are presented in Table 5.11 below.

The Primary Award group overall offered 4.9 percent more in product

discount than the Budget Award, but this did not necessarily guarantee a

lower cost since the base costs (manufacturer’s list price) could be

increased to compensate for the higher discount percentages (see

Chapter 4 for a thorough discussion of the potential issues in considering

product discount percentages as a valid tool to evaluate costs among

competitors). The relatively low standard deviation of the product discount

may indicate the high level of product discounting is standard practice

within the industry.

Table 5.11

Initial Financial Evaluation Summary

Primary Budget
No Criteria Award Award Difference
1 Product Discount – Average 63.1% 58.2% 4.9%
2 Installation Fee – Average 4.6% 6.2% -1.6%
3 Design Fee – Average 1.9% 0.5% 1.4%
4 Product Discount – σ 3.8% 5.1% -1.3%
5 Installation Fee – σ 1.5% 4.5% -3.0%
6 Design Fee – σ 0.9% 0.8% 0.1%

Once all of the information was compiled, the University shortlisted

Proposers that moved forward in the evaluation process. Table 5.12

shows the total scores for each firm after the initial evaluation was
109
complete. While there was a 4.2 point difference between Firms S and P

(which is large compared to the average 1.5 point difference between all

other firms), the University intended to make three awards under the

Primary group. Therefore, the University preferred to shortlist at least five

Proposers.

After the University notified the firms, the committee raised

additional concerns about the evaluation approach for, and weight

assigned to, cost. The RFP did not contain a detailed explanation of how

cost was to be evaluated, neither was the weight on cost specifically

identified. The researcher conducted an analysis that removed cost as a

weight – this is shown in the “Primary (Adjusted)” column in Table 5.12

below. In the analysis, Firm B moved up one rank, and was then ranked

higher than Firm A. However, this analysis was completed after Firm A

had already been notified of their shortlisting. Therefore, to minimize

political risk and ensure complete defensibility in case of a protest, the

University elected to also shortlist Firm B. The University was comfortable

excluding Firm J from a shortlist because they did not submit PPI for their

Lead Designer and Lead Installer.

Note that Firm A’s Initial Financial Evaluation Total Fees (Table 4.5

from Chapter 4) for the Budget Award was $0. Recall also that the linear

evaluation model sets the baseline factor to be the “best” score for each

factor; for cost, the best score is assigned to the lowest price. Dividing

any firm’s cost by a baseline of $0 would produce an indeterminate result.

110
The researcher overcame this issue by arbitrarily setting Firm A’s cost to

$0.000000001 in the evaluation model.

Firm A’s Total Fees value also severely skewed the model; in fact,

no other firms received any (measurable) points for cost. The researcher

carried out the same analysis in the Budget Award – the updated ranks

and scores are shown in the “Budget (Adjusted)” column of Table 5.12

below. Removing cost as a weight moved Firm A to the seventh position,

out of nine proposers, and they would not have been considered for

shortlisting for the budget award. With, or without, the 15 percent cost

weight, Firms F, K, L, and R remained in contention for shortlisting. Of

course, because cost did carry a 15 percent weight determined by the

University, Firm A, as the top ranked firm, had to be shortlisted. The

differential between Firms L and K was 0.2 points, while the difference

between Firms K and J was 0.9 points; therefore, Firm J was not

shortlisted. The evaluation model with no weight on cost was only used

as a tool to ensure fairness – a 15 percent weight on cost was used on all

official evaluation models.

Six firms were interviewed for the Primary Award, and five firms

were interviewed for the Budget Award. During the interview, the three

firms, who would later be awarded contracts, independently identified that

the most significant risk to the successful delivery of furniture services was

not being involved soon enough during the construction planning process

of a large capital project.

111
Table 5.12

Proposers’ Total Score from Initial Evaluation

Primary Budget
No Primary (Adjusted) Budget (Adjusted)
1 Firm F (60.0) Firm S (50.0) Firm A (57.5) Firm F (49.6)
2 Firm H (58.4) Firm F (47.8) Firm F (49.6) Firm R (47.2)
3 Firm S (55.1) Firm P (44.7) Firm R (47.2) Firm L (45.1)
4 Firm P (50.9) Firm H (43.4) Firm L (45.1) Firm K (44.9)
5 Firm A (49.5) Firm J (42.3) Firm K (44.9) Firm J (44.0)
6 Firm J (48.5) Firm B (41.3) Firm J (44.0) Firm B (42.8)
7 Firm B (48.2) Firm A (40.9) Firm B (42.8) Firm A (42.5)
8 -- -- Firm E (40.7) Firm E (40.7)
9 -- -- Firm G (36.1) Firm G (36.1)
The numerical values are each proposer’s total score. Each individual
column is sorted with the highest score listed first

As discussed in Chapter 4, Firm F was rated particularly high in

both award categories. For the Primary Award, their overall score was 9

percent higher the other awarded dealers, and 17 percent higher than all

other proposers. Firm F’s high scores were primarily determined by their

Cost Proposal (Install and Design Fees and Financial Clarification) and

Interview ratings, and to a lesser degree, their RAVA Plan rating. Firm F’s

Install and Design fees are 43 percent less than the other proposers, and

their interview rating is 21 percent higher than the other interviewed

proposers. In the Budget Award, Firm F’s overall score is 17 percent

higher than all of the other proposers’ scores. The main differentials were

their Interview Scores, which were 52 percent higher than the other

proposers, and their RAVA plan rating, which was 18 percent higher than

the other proposers. Firm F had an overall cost proposal (initial and

112
clarification costs) that was 37 percent less than average of the other

awarded dealers in the Primary Award group.

Table 5.13

Primary Award Evaluation, Point Differential from Firm F

Awarded All
Firm F Dealers Proposers
No Criteria Points (no Firm F) (no Firm F)
1 Install and Design Fees 12.27 -6.68 -4.31
2 RAVA Plan 23.36 -0.18 -2.01
3 Service Proposal 14.79 -0.53 -1.65
4 PPI – LI 2.22 0.03 -0.17
5 PPI – LD 2.19 0.06 -0.15
6 PPI – D 2.19 0.06 0.03
7 PPI – M 2.13 0.12 0.08
8 PPI - # LI 0.18 0.08 -0.01
9 PPI - # LD 0.23 0.03 -0.04
10 PPI - # D 0.25 0.00 0.00
11 PPI - # M 0.25 -0.06 -0.06
12 Financial Clarification 15.00 -2.69 -2.71
13 Interview – D 17.50 -2.37 -4.84
14 Interview – M 17.50 -3.73 -5.48

113
Table 5.14

Budget Award Evaluation, Comparisons of Raw Data

All Proposers
No Criteria Firm F (no Firm F)
1 Install and Design Fees 0.00 1.87
2 RAVA Plan 25.00 -3.85
3 Service Proposal 15.00 -2.14
4 PPI – LI 2.22 -0.28
5 PPI – LD 2.19 -0.24
6 PPI – D 2.19 0.02
7 PPI – M 2.13 -0.05
8 PPI - # LI 0.18 -0.05
9 PPI - # LD 0.23 -0.07
10 PPI - # D 0.25 -0.01
11 PPI - # M 0.25 -0.06
12 Financial Clarification 13.68 -0.46
13 Interview – D 17.50 -5.25
14 Interview – M 17.50 -6.64

114
 Table 5.15

Primary Award Evaluation, ∆ from Best Score

No Criteria Best Score A B F H J P S

Install and
1 15 -6.4 -8.1 -2.7 0.0 -8.9 -8.9 -9.9
Design Fees
2 RAVA Plan 25 -5.3 -5.4 -1.6 -3.4 -4.2 -3.6 0.0
3 Service Proposal 15 -3.4 -3.0 -0.2 -2.7 -0.6 -1.5 0.0
4 PPI – LI 2.25 0.0 -0.1 0.0 0.0 -1.1 0.0 0.0
5 PPI – LD 2.25 0.0 -0.1 -0.1 -0.1 -1.1 0.0 0.0
6 PPI – D 2.25 0.0 -0.1 -0.1 0.0 -0.1 0.0 0.0
7 PPI – M 2.25 0.0 0.0 -0.1 -0.1 -0.1 0.0 0.0
8 PPI - # LI` 0.25 -0.2 -0.1 -0.1 -0.1 -0.2 0.0 0.0
9 PPI - # LD 0.25 -0.2 0.0 0.0 0.0 -0.2 0.0 0.0
10 PPI - # D 0.25 0.0 0.0 0.0 0.0 0.0 0.0 0.0
11 PPI - # M 0.25 -0.1 0.0 0.0 -0.2 0.0 -0.1 0.0
115

Financial
12 15 -2.7 -3.5 0.0 -1.9 N/A -3.9 -1.5
Clarification
13 Interview – D 17.5 -6.9 -3.4 0.0 -9.2 N/A -3.6 -1.1
14 Interview – M 17.5 -7.0 -5.2 0.0 -7.7 N/A -4.3 -3.2
Note: LI = Lead Installer, LD = Lead Designer, D = Dealer’s Representative, and M = Manufacturer’s
Representative
 Table 5.16

Budget Award Evaluation, ∆ from Best Score

No Criteria Best Score A B E F G J K L R

Install and
1 15 0.0 -15.0 -15.0 -15.0 -15.0 -15.0 -15.0 -15.0 -15.0
Design Fees
2 RAVA Plan 25 -3.9 -4.0 -5.5 0.0 -5.1 -2.7 -4.2 -3.4 -2.0
3 Service Proposal 15 -3.2 -2.8 -3.4 0.0 -4.7 -0.4 -0.9 -0.9 -0.9
4 PPI – LI 2.25 0.0 -0.1 -0.1 0.0 -1.1 -1.1 0.0 -0.1 0.0
5 PPI – LD 2.25 0.0 -0.1 0.0 -0.1 -1.1 -1.1 0.0 -0.1 0.0
6 PPI – D 2.25 0.0 -0.1 0.0 -0.1 0.0 -0.1 0.0 -0.1 0.0
7 PPI – M 2.25 0.0 0.0 0.0 -0.1 -1.1 -0.1 0.0 -0.1 0.0
8 PPI - # LI 0.25 -0.2 -0.1 -0.2 -0.1 -0.2 -0.2 0.0 -0.1 0.0
9 PPI - # LD 0.25 -0.2 0.0 -0.1 0.0 -0.2 -0.2 0.0 -0.1 0.0
10 PPI - # D 0.25 0.0 0.0 0.0 0.0 0.0 0.0 0.0 -0.1 0.0
11 PPI - # M 0.25 -0.1 0.0 0.0 0.0 -0.2 0.0 -0.1 -0.1 0.0
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Financial
12 15 0.0 N/A N/A -1.3 N/A N/A -1.0 -3.7 -2.4
Clarification
13 Interview – D 17.5 -8.3 N/A N/A 0.0 N/A N/A -3.2 -7.4 -2.1
14 Interview – M 17.5 -8.0 N/A N/A 0.0 N/A N/A -4.7 -7.4 -6.5
Note: LI = Lead Installer, LD = Lead Designer, D = Dealer’s Representative, and M = Manufacturer’s
Representative
Project Performance Information

The final source of data was the project performance information,

which consisted of customer satisfaction responses from project closeout

surveys, Weekly Risk Reports (WRR), and Project Record Lists (PRL).

The value-based system tracks all projects within the Tri-University

system; thus, the cost and schedule deviation data is based on the whole

population of furniture projects. The customer satisfaction results were

discussed previously in this chapter in the University Buyer Satisfaction

Survey results. The researcher used three data characteristics to

describe project performance: Purchasing Volume, Schedule Deviations,

and Cost Deviations.

The Universities, as a whole, have purchased significantly more

from Firm F. Firm F has completed 37 percent more projects than Firms P

and S combined, and 83 percent more in terms of total cost. Table 5.17

presents each proposer delivery volume, in terms of quantity and total

cost, as a percentage of the total number of projects.

Table 5.17

Summary of Relative Delivery Volume by Dealer

No Criteria Firm F Firm P Firm S

1 Total Number of Delivered Projects 61% 7% 32%
2 Total Awarded Cost ($M) 85% 5% 9%

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 The next component of the project performance data was the

Schedule Deviation (see Table 5.18). Firm F had the lowest overall

schedule deviation at 1.6 percent, which was 8.4 percent less than the

10.0 percent average delay rate. Firm S’ dealer deviation rate is 23.2

percent higher than Firm F’s. Clearly, there is significant performance

differential in on-time delivery between the dealers. Of all dealer-

generated delays, 67.1 percent are related to manufacturer issues, such

as late or damaged shipments. The remaining delays, 32.9 percent, are

caused by an incorrect order placed by the dealer (wrong color or

incorrect finish ordered).

The researcher also counted the number of projects that were

delayed for any reason. 87 percent of Firm F’s projects were completed

on-time, which was 27 percent higher than Firms P and S’ average of 64

percent.

Table 5.18

Schedule Deviation Differential (from Firm F)

Cost Deviation Firm F

No Source (Raw Values) Firm P Firm S
1 Client 3.4% -3.4% 3.8%
2 Designer 0.0% 0.0% 0.0%
3 Dealer 1.6% 2.0% 23.2%
4 Unforeseen 0.0% 1.9% 0.0%
5 Overall 4.9% 0.5% 27.0%

The final component of project performance is related to cost

changes. The overall dealer cost deviation rate was 0.0008 percent. This
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was expected as the price lists are fixed and published. The deviations

identified were caused by two projects where the dealer incorrectly placed

an order.

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 Chapter 6

RESULTS

Introduction

The fundamental purpose of this thesis was to document a

methodology that organizations can use to become more efficient,

particularly in the delivery of commodity contracts. Specifically, the two

objectives of this thesis were to develop a tool that Facility Managers can

use to more efficiently procure commodity services, and to document the

implementation of a best value business leadership and risk management

structure for a service that is typically perceived as a commodity. The

measures of meeting the first objective were identified by:

1. Results and discussion of the initial buyer survey

2. Discussion and analysis of two methods to compare financial

proposals

3. Estimated savings of Tri-U Furniture Contract

4. Adaptation of the PIPS selection criteria to the furniture delivery

service

The measures of the second objective were:

1. Results and discussion of the vendor survey

2. Integration of risk mitigation tools into a buyer’s supply chain.

3. Comparative analysis of the buyer survey before, and after, the

best value implementation

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 4. Discussion and results of buyer purchasing preferences

More Efficient Procurement Model for Facility Managers

As discussed in Chapter 1, purchasing staff from Arizona State

University identified to the researcher that the delivery of furniture services

was not optimal. This section will discuss the application of a value-based

approach to commodity service provider selection, and how Facility

Managers can use the fringe benefits of the process to increase the value

of their profession to a client organization.

Results and discussion of the initial buyer survey.

After developing a scope of the research work, the researcher surveyed

buyers from each of the three Universities. The results from the survey

were lower as compared to other PIPS projects the researcher has

participated on. In particular, performance at NAU was significantly lower

than ASU and UA. This conclusion was identified by the results of a

single-factor ANOVA and a two-tailed t-test of the overall performance for

each university. These results confirm the ASU purchasing staff’s

assertion that the delivery of furniture services was not optimal.

Discussion and analysis of two methods to compare financial proposals.

The initial financial evaluation was not defined in the RFP, and therefore

proposers could not tailor their submittals to provide a higher level of value

to the University. The University considered the average design and

installation fees for a typical project with a list cost of $50,000. If a

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proposer submitted their price sheets in terms of net cost, the University

first calculated the discounted project cost (using the proposer’s average

percent discount value), and then calculated the design and installation

fees. While this approach provided the University with a relative

comparison of design and installation fees for each proposer, the

algorithm was susceptible to base product cost inflation by the

manufacturers (for net-based price lists). The percentage discount off of

list was not necessarily representative of actual cost savings for the

Universities, because manufacturers could have offered steeper discounts

by increasing their base list prices. Additionally, the initial financial

evaluation algorithm did not contain any techniques to identify the

suppliers’ relative product cost.

After the proposers were shortlisted and interviewed, the University

requested a financial clarification. This clarification requested that

proposers provide the product, design, and installation costs for two

typical designs that would appear in many University furniture projects.

The proposers’ responses included all costs that the Universities would

incur on a typical project, and also allowed for a relative comparison

between suppliers. The disadvantage was that the typicals were just that:

a representative sample of an average University project, but exclusive of

unique configurations or other atypical designs. However, even with this

limitation, the researcher proposes that this approach is simpler to

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understand for both parties (buyer and supplier), and gives a better,

though not perfect, representation of each proposer’s cost.

Estimated savings of Tri-U Furniture Contract.

The contracted dealers identified that their product discount percentages

were, on average, 14.9 percent less than their State of Arizona contract.

From July 2009 – January 2012, the Universities purchased $19.3M of

furniture and related services. Thus, the discounts provided to the

University under the Tri-U Contract represent an estimated savings of

$2.9M.

The researcher did not have data on the cost savings of the

previous Tri-U contract (compared to the State contract). Therefore, a

relative measure of the additional value from the best value RFP could not

be identified. As in identified in the RAVA plans and Interviews, not

involving furniture soon enough are the dealers’ greatest risk. The Tri-U

best value environment is structured such that the buyers are encouraged

to proactively coordinate with the dealers, which minimizes the dealers’

(and Universities’) risk. Thus, the system is more efficient and more

profitable for the dealers, which reduces overall cost (Kashiwagi J.,

Sullivan, & Kashiwagi D., 2009; Sullivan & Guo, 2009).

The researcher proposes that a baseline comparison of discount

levels is the optimal financial model for the traditional product-level

discounting structure. This approach minimizes any potential baseline

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cost inflation by the manufacturers, and also gives the owner a tool to

evaluate the relative value they are receiving.

Adaptation of the PIPS selection criteria to the furniture delivery service.

ASU had used PIPS for the selection and delivery of several other

services prior to using the Tri-U furniture contract. One of main

differences of the PIPS RFP, as compared to the previous Tri-U Furniture

RFP and the State of Arizona Furniture RFP, was that the proposers were

encouraged to respond in terms of the risk that may impact their ability to

successfully deliver the project (see Table 3.2 from Chapter 3). As a

result, the proposals were significantly shorter than what was typically

provided in response to the traditional RFP. An ASU purchasing staff

member identified to the researcher that, “Under PIPS, we received much

more concise proposals, instead of a roomful of specifications and

marketing information that we would normally receive.”

Specifically in the application of PIPS to the furniture RFP, the

researcher recommends two modifications to the selection criteria. First,

the financial proposal should take into account the relative value that the

Owner is receiving. If a relative comparison is not possible from all

proposers, a financial evaluation that requires proposers to provide cost

information on typical designs is an acceptable alternative.

Second, the value added portion of the Risk Assessment / Value

Added (RAVA) plan should either be excluded, or clarified in the RFP. By

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definition, value added options allow proposers to suggest additional

scope and services that are above and beyond what was specified by the

client. Hence, the ideas must have a cost impact; if they did not, the

proposer would be expected to include it as part of their service to the

owner. Instead, the value added options section made it easier for

dealers to submit “marketing information,” which has little to do with

minimizing project risk. If the proposers can quantify value added services

in terms of cost, even without a specific project at hand, the VA could then

be a component of evaluation.

Impact of a Value-based Leadership and Risk Management Structure

This section summarizes the results and impacts of the best value

Tri-University furniture contract, and presents evidence that, while a

product may be perceived as a “commodity”, Facility Managers should not

make this assumption of the entire supply chain.

Results and discussion of the vendor survey.

The researcher surveyed the potential proposers, and identified that while

the industry is satisfied with the current environment of relationship-based

delivery of services (as evidenced by the traditional furniture RFPs, and

comments received on the vendor survey), vendors also have the

capability to implement best value practices. The researcher conducted a

t-test that confirmed that overall, dealers and manufacturers do not show a

significant difference in their perception of industry’s characteristics.

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However, there is a significant difference in their perception of industry

performance: the dealers perceived that industry performance was much

lower than what the manufacturers interpreted. The researcher was

unable to gather further data to analyze this perceived differential in

performance. However, the researcher suggests that dealers are the

clients’ first and only point of contact for all furniture-related interactions.

Part of these interactions surely includes the resolution of problems and

responding to customer complaints. Manufacturers are, perhaps, largely

isolated from these day-to-day interactions, and as such, their perceptions

of industry performance are focused on industry-wide, supply chain

issues.

Integration of Risk Mitigation Tools into a Buyer’s Supply Chain.

As illustrated in Figures 3.4 and 3.5, risk mitigation and performance

tracking are critical components of the best value furniture delivery

structure. Regardless of the project type (Match Existing, non-Capital, or

Capital), the dealers are required to document risk and measure

performance. For smaller projects, the vendors document the start, initial

completion, and actual completion dates, as well as initial and final costs,

on the Project Record List (PRL). Any deviations between the initial

baseline (date or cost), and the final or actual result, must be documented.

For larger projects, in addition to the PRL requirements, dealers must

develop a risk management plan (RMP) with the buyer, and a milestone

126
schedule for the project, and document these items on the Weekly Risk

Report (WRR). The development of the RMP encourages the vendor to

preplan the project, and specifically focus on activities that may stop the

project from being successful. Please see Chapter 3 for further

information about the PRL and WRR.

It is the researcher’s supposition that the integration of the tools into

the best value Tri-U system assists vendors to think of furniture projects in

terms of cost and schedule deviation, as well as documented customer

satisfaction. This is collectively known as, “performance measurement.”

For dealers, the PRL and WRR document the sources of deviation; for

clients, the RMP and WRR provide a snapshot of project performance and

the dealer’s plan to minimize risk; and for the University purchasing staff,

the tools provide a high level overview of project risk, dealer performance,

and university performance. The data from these tools are also the basis

of analysis in the following four subsections.

Comparative analysis of the buyer survey.

The initial buyer survey identified that overall performance was rated at 7

out of 10, and overall satisfaction at NAU was 40 percent lower than the

overall combined average of ASU and UA. NAU reported that 19 percent

fewer projects were completed on-time, as compared to ASU and UA.

The performance differential was confirmed through an ANOVA of the

overall performance ratings from each university, and a t-test confirmed

127
that a source of significant differential was between NAU’s average

performance, and the ASU and UA average performance.

NAU should is unique university in terms of geographic location and

student population. NAU’s student population is 62 percent less than that

of ASU and UA, and is 39 percent the size of its host city. The

remoteness of NAU may therefore provide insight to explain this

performance differential. Performance may be impacted if suppliers are

unable to fully support a supply chain network to the NAU campus. As

such, consideration of the proposers’ abilities to support NAU and their

plan to minimize the risk of nonperformance are critical factors that the Tri-

U buyers should consider. Clearly, in a situation such as this, the

efficiency of the supply chain is just as important as, if not more so than,

the cost of product.

Nearly three years after execution of the best value Tri-U Furniture

Contract, the researcher conducted a follow-up ANOVA of the customer

satisfaction ratings for each University. The analysis identified that there

was no significant performance differential between the universities, and a

post-hoc t-test of NAU performance, compared the ASU and UA

performance, identified no significant differential. The researcher also

conducted a t-test for each university’s initial buyer survey responses and

the project completion closeout surveys. Each of the three t-tests

128
confirmed that there was a significant performance increase between the

initial survey and closeout survey (under the best value system).

These results suggest two important conclusions of implementing a

value-based approach on commodity suppliers. The first is that the best

value system stabilizes an environment where performance had

previously been erratic. This is evidenced by the results of the initial

ANOVA (Table 5.3 from Chapter 5), which showed performance

differential between each University, compared to the results of an

ANOVA of the best value customer responses (Table 5.5), which showed

no significant differential between the universities. A second important

conclusion is that a best value risk management system can increase

overall performance in an environment where risk management practices

were not traditionally used. A t-test confirmed that there is a significant

overall performance differential between the initial buyer survey, and the

best value system. In fact, overall performance ratings increased by 24.3

percent under the best value structure.

If the delivery of furniture services is a commodity, client

organizations would use price as the primary differentiating factor for

supplier selection. Therefore, the buyer would see little value in

evaluating non-price factors (ability to minimize risk or past performance

information). However, the increased level of overall performance ratings

from the Universities’ buyers indicates that implementing a structured risk

129
management system can bring tremendous value to the client

organization. It also shows that the perception of price being the most

important factor in service provider evaluation (the “commodity mentality”)

is not optimal.

Discussion and Results of Buyer Purchasing Preferences.

The researcher analyzed the level of purchasing levels, and identified that

Firm F accounted for 61 percent of the total number of furniture projects,

and 85 percent of awarded cost of all furniture projects. Buyers are clearly

displaying a preference for Firm F, based on the purchasing volume. The

researcher acknowledges that Firm F is also the lowest proposer by an

average of 37 percent for the initial financial proposal and financial

clarification. Therefore, the reader might surmise that their low cost is the

driving factor behind customer preference for Firm F. However, the

researcher proposes that there are performance factors that may also be

affecting buyer purchasing behavior.

Firm F’s schedule deviation rate is 8.4 percent less than the

average delay rate, and 27 percent more of Firm’s F are completed on-

time, as compared to Firms P and S. Recall that Firm F has maintained

these relatively higher levels of performance over the span of 684

projects. Therefore, the researcher proposes that the buyers’ preference

for Firm F is based on a combination of the lower overall cost, lower

schedule deviation rate, and higher on-time completion rate.

130
 The hypotheses of this thesis were as follows:

• The first hypothesis was that while a service may generally

be perceived as a commodity, there are actually differing

levels of service performance between suppliers.

Performance is defined in terms of cost and schedule

deviations.

• The second hypothesis was that implementing a best value

business and leadership structure at the final buyer’s

position in the supply chain will increase upstream

performance, and thereby result in increased performance at

the buyer’s site.

• The third hypothesis was that by implementing a structured

preplanning, risk identification, and risk management system

will stabilize overall system performance in the buyer’s

organization.

Limitations

The scope of this thesis was limited by the following conditions:

1. The research was conducted at Arizona’s three largest public

universities.

2. 52 projects were excluded from analysis due to lack of cost and

schedule baseline information. Also excluded were projects

where Capital Programs staff selected their own furniture

131
 dealers that were outside of the dollar limit range of the Tri-U

contract. However, discussions with the dealers and University

purchasing staff indicate that all projects have been procured

with the confines of the Tri-U contract.

3. The State of Arizona funding for public universities has declined

for the life of the Tri-U contract ("Sharp tuition hikes," 2010). As

such, purchasing volume is not necessarily representative of

future buyer behavior.

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 Chapter 7

CONCLUSION

Summary

Purchasing departments and facility management groups across

many different organizations are charged with the task of acquiring quality

services for the lowest cost. The services being delivered can have an

impact on many different facets of the company. One such area is the

procurement of commodities that are utilized by the whole company. By

definition, the only distinguishing characteristic of competing commodity

goods is their cost (Rayburn, 2010; Reimann, Schilke, & Thomas, 2010;

Rushkoff, 2005). As a result, organizations forego the increased

efficiencies of measuring supplier performance, preplanning and

coordinating with all critical parties, and selecting suppliers on the basis of

their ability to identify and minimize the risk they do not control. Facility

managers and buyers who are experiencing customer dissatisfaction,

minimal supplier accountability, misalignment of expectations, or project

risk, especially in the areas of commodities, is likely the result of a

misperception that price is the most important factor in selection; the

researcher has termed this behavior as exhibiting a “commodity

mentality.”

This approach tends to be more common in large organizations due

to the localization of accountability in bureaucracies. Departments within

133
bureaucracies can operate like silos who give minimal consideration of

their value-adding functions with respect to other entities (Armajani, 2010;

Dell, 2005; Porter, 1998). Individuals within bureaucracies are assigned

specific tasks, and in an effort to increase accountability, there is usually a

very well-defined hierarchal structure of the manager-employee

relationship. All organizations have a certain level of bureaucracy, and the

degree of adherence to a bureaucratic structure can be correlated to an

organization’s overall performance (Gratzer, 1998; Schneider & Kiser,

1994; Toye 2006). Large bureaucracies are slower to change and cannot

always communicate effectively (Haveman, 1993; Schneider & Kiser,

1994).

The researcher conducted a literature review to understand the risk

management practices of Facility Managers, within the context of

bureaucracies. Risk, within the scope of this research, is any event or

behavior that has an impact on cost, schedule, or client satisfaction

(Kashiwagi & Byfield, 2002). In general, there are three tenets of

successful risk mitigation: measurement, preplanning, and transference of

the control and accountability to an expert. A measurement system must

be in place to actually identify the type and impact of risk being

encountered. Preplanning utilizes the core expertise of the Facility

Manager to identify where and when risk will occur, as well as the

estimated impact of the risk. The written documentation of the expert’s

134
perception of, and resolution to, risk is then used to resolve issues.

Facility Managers should proactively seek to align the delivery of services

with experts – this requires measurement to identify the performance of

suppliers. The methods to manage risk are interdependent of each other.

A commodity service is one where there is limited differentiation of

the service being provided, with exception to price. Markets for these

types of services are characterized by intense price-based competition

and lower profit levels (Reimann, Schilke, & Thomas, 2010). A

“commodity chain” is a specialized type of supply chain, in that the final

product is a commodity (Korzeniewicz & Gereffi, 1994). Porter (1998)

proposes that organizations can use the concept of a value chain to

increase the competitive advantage they bring to their buyers. Firms that

use this approach can understand the added value a product receives as

it moves through the manufacturing process.

The researcher proposed that a valued-based approach that

considers the suppliers’ ability to minimize risk and document performance

would increase the overall performance of the system. Specifically, the

researcher proposed, and confirmed, the following hypotheses:

1. There are different levels of supplier performance for services that

are typically perceived as commodity. The research identified that

one supplier delivered 27 percent more of their projects on-time

compared to the other two suppliers. Additionally, this same

135
 supplier had a schedule deviation rate that was 8.4 percent less

than the others.

2. Using a best value contract management structure will increase

performance at the buyer’s site, as well as upstream performance

in the supply chain. The customer performance ratings increased

by 24.3 percent under the best value environment (compared to the

initial performance ratings). While the researcher was not privy to

the upstream supply chain performance information, deductive logic

suggests that upstream performance must have also improved to

achieve the increased levels of onsite performance. In order for the

furniture dealers to provide a higher level of service, especially in

terms of on-time delivery performance, the dealers’ Tri-U Furniture

Contract supply chain must have become more efficient.

Additionally, an interview ASU’s Executive Director of Purchasing

identified that, “the manufacturers are now coming in sooner during

the design process and showing us their latest innovations. The

Tri-U Contract is going well.”

3. A structured preplanning, risk identification, and risk management

process will help to stabilize overall performance of the system.

Stabilization means that significant performance differentials are

minimized throughout the various points of interaction between the

suppliers and buyer organization. An ANOVA of the initial

136
 performance ratings indicated that there was significant

performance differential between the Universities. A second

ANOVA of performance ratings under the best value structure

indicated that there was no significant performance differential.

Performance stabilized in the best value environment.

Research Benefits

The research contained herein documents a more efficient

methodology to increase the performance in areas where price is

traditionally considered to be the primary differentiating factor between

suppliers. The researcher used a best value process (PIPS) that

minimized the amount of effort and need for technical expertise of the

selection committee. The process evaluated proposers on their ability to

succinctly identify their plan to minimize risk that would have otherwise

prohibited the successful execution of the Tri-U Furniture contract. The

researcher also proposed a more efficient and accurate process to

evaluate the suppliers’ financial proposals. The method focused more on

the actual costs buyers would see on a typical furniture project, instead of

considering product discount percentages, which have little correlation to

actual direct costs to the buyer.

The research also documents the impact of implementing a

performance measurement system within a very large bureaucratic

university system. The structure is self-documenting by the furniture

137
suppliers, and therefore requires minimal efforts from the buyer

organization. Additionally, the measurements show a clear performance

differential between suppliers, proving that there is tremendous value in

considering performance factors of “commodity” suppliers.

Recommendations for Future Research

While the Universities received increased levels of performance

and reduced costs, further research in specific areas would increase the

overall understanding of risk management and performance information

within commodity supplier contracts. First, additional exploratory work is

needed to understand the level of application of a best value structure in

other “commodity” services (outside of furniture). The research presented

in this thesis indicates that a best value approach is successful in the

furniture industry, but it does not unequivocally guarantee its success in

other areas.

Additional research is also needed to confirm increased upstream

supply chain performance when an end client implements a risk and

performance measurement structure. The research would need document

the acclimation of ‘best value’ principles throughout the supply chain.

Finally, further testing of a value-based approach for commodity

contracts at different types of universities and buyer organizations would

help to confirm the validity and applicability of the research in different

environments. A subset of this research would be to document the cost

138
savings organizations receive relative to some sort of baseline (for

example, a statewide commodities contract).

Conclusion

The goals of the research was to document a more efficient

approach that Facility Managers can to select commodity-services

providers, and develop a performance measurement and formal risk

management structure of commodity contracts within a large bureaucratic

organization. The best value procurement methodology minimized the

selection committee’s effort and allowed the proposers to respond in terms

of their risk management expertise, past performance, and ability to

preplan. The research also analyzed typical furniture financial proposals,

and found that evaluating product percentage discounts is not the most

efficient approach to evaluation costs. Instead, an optimal approach

would be to consider the relative discounting of the proposers’ financial

offer to a widely available baseline level.

This research also developed a performance measurement and risk

management system for commodity contracts. The system allowed the

abstraction of cost deviation, schedule deviation, and customer

satisfaction from the technical details of the commodities being delivered.

The research did not address the whether a particular good is a

‘commodity’, but instead focused on the supply chain that delivered the

good. The system allows Facility Managers to monitor the performance of

139
the commodity suppliers (in terms of risk and customer satisfaction), while

shifting the selection details or personal preferences to the end-client. As

a result, overall customer satisfaction increased by 24 percent, while

simultaneously stabilizing performance across all Universities.

Additionally, the system identified that one supplier had 27 percent more

projects completed on-time, as compared to the other suppliers. This

same supplier accounted for 85 percent of all Tri-U projects in terms of

cost. In short, the results show that there is significant performance

differential between suppliers and that price alone is an insufficient

criterion to select commodity suppliers.

140
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148
 APPENDIX A

FURNITURE INDUSTRY SURVEY

149
 Performance Based Studies Research Group
Phone: 480-965-4570 Fax: 480-965-4371
Website: www.pbsrg.com

To: John Doe

ABC Vendor

Phone: (123) 456-7890 (123) 456-7899

The PBSRG, at Arizona State University, is collecting performance

information and perceptions about the Furniture Services industry. Please
rate each of the criteria on a scale of 1 to 10, with 10 representing
completely agree in a particular area and 1 representing completely
disagree. If you do not have sufficient knowledge of performance in a
particular area, please leave it blank. Note that this is a university study
and your responses will remain anonymous and used in aggregate form

A. Background Information

NO CRITERIA UNIT Rating

1 Are you a Dealer of Manufacturer? Select Dealer / Manufacturer
Did you personally attend the Idea
2 Exchange Session on 11/10/08 at Select Y / N
ASU?
How many years has your company
3 #
been in business?

B. Best Value Perceptions

NO CRITERIA UNIT Rating

A “Best Value” approach will minimize a client’s
4 (1-10)
risk in terms of design, installation, and follow-up
5 A Best Value system is fair to the vendors (1-10)
A Best Value system favors high performance
6 (1-10)
vendors

C. Furniture Services Industry Perceptions

NO CRITERIA UNIT Rating

The furniture services industry has performance
7 (1-10)
problems in terms of customer satisfaction
Vendors (dealers or manufacturers) have the
8 (1-10)
capability to implement Best Value practices

150
 Performance information should be used much
9 (1-10)
more in the furniture services industry
Traditional marketing- and relationships-based
10 contract award processes do not motivate higher (1-10)
performance
The furniture services industry is in need of a
11 (1-10)
better contracting (vendor selection) procedure
Using best value procurement will improve the
12 (1-10)
quality of vendors in the furniture services industry
Overall performance of the furniture services
industry
13 (1-10)
(10 = very high performance, 1 = very low
performance)

151
 APPENDIX B

INITIAL BUYER SURVEY

152
 Performance Based Studies Research
Group
Phone: 480-965-4570 Fax: 480-965-4371
Website: www.pbsrg.com

To: John Doe Email: John.Doe@asu.edu

ASU – HR Department
Phone: 623-965-1230 480-203-4371

The PBSRG, at Arizona State University, is collecting information about

the current performance of furniture services delivered under the Tri-U
Furniture Contract. Rate each of the criteria on a scale of 1 to 10, with 10
representing the best (i.e. extremely satisfied) in a particular area and 1
representing the worst. Please rate each of the criteria to the best of
your knowledge. If you do not have sufficient knowledge of past
performance in a particular area, please leave it blank.

Evaluation of: [dealer name]

A. General Evaluation of the Delivery Process

NO CRITERIA UNIT Rating
Overall satisfaction with the furniture delivery
1 (1-10)
service
Rate how much effort was spent managing the
dealer
2 (1-10)
(10 represents a large amount of effort, 1
represent the least amount of effort)

B. Dealer Evaluation
NO CRITERIA UNIT Rating
Ability to manage the project cost (minimize
3 (1-10)
change orders)
Ability to maintain project schedule (complete on-
4 (1-10)
time or early)
5 Quality of workmanship (1-10)
Professionalism and ability to manage (also
6 includes responses and prompt payment to (1-10)
suppliers and subcontractors)
Close out process (no punch list upon turnover,
7 warranties, operating manuals, submitted (1-10)
promptly)
Communication, explanation of risk, and
8 (1-10)
documentation (weekly reporting during
153
 installation)
Ability to follow the users’ rules, regulations, and
9 (1-10)
requirements (housekeeping, safety, etc…)
Overall customer satisfaction and comfort level in
10 (1-10)
hiring again
11 Are you satisfied with the dealer? Circle Y / N

C. Projects Evaluation
NO CRITERIA UNIT Rating
12 What percent of projects were completed on-time? %
What percent of the final product(s) match your
13 %
initial expectations?
What percent of products were damaged upon
14 %
delivery (past fiscal year)?

154
 APPENDIX C

PAST PERFORMANCE INFORMATION SURVEY

155
 Furniture Project Performance Questionnaire
Code <<Code>>
<<Evaluator
To: Phone: <<Contact Phone>>
Name>>
Fax: <<Contact Fax>>
Subject: Past <<Name of Company>>
(Name of Company Being Surveyed)
<<Name of Any Individuals>>
(Name of Individuals Being Surveyed)
The PBSRG is a research group at Arizona State University that collects
past performance information on vendors and key personnel to assist
clients in awarding projects based on value. The firm/individual listed
above has listed you as a reference for a past project they have
completed. We would greatly appreciate it if you would take a few
moments to complete this survey. Please rate each of the criteria on a
scale of 1 to 10, with 10 representing that you were very satisfied and 1
representing that you were very unsatisfied. Please rate each of the
criteria to the best of your knowledge. If you do not have sufficient
knowledge in a particular area, please leave it blank.
Client <<Client Work Was Performed Date <<Date>>
Project For>>
Name: <<Project Name>> Completed:

NO CRITERIA UNIT RATING

Ability to maintain the project cost (minimize
1 (1-10)
change orders)
Ability to maintain project schedule (complete
2 (1-10)
on-time or early)
3 Quality of service (1-10)
4 Professionalism and ability to manage (1-10)
5 Close out process (1-10)
Communication, explanation of risk, and
6 (1-10)
documentation
Ability to follow the users rules, regulations, and
7 (1-10)
requirements
Overall performance and comfort level in
8 (1-10)
hiring again
How well did the final product(s) match
9 (1-10)
your initial expectations?
Are you satisfied with the company /
10 Circle Y / N
individual(s)?
Installation is complete and final
11 Circle Y / N
payment has been made?

156
 APPENDIX D

TRI-U FURNITURE CONTRACT, RFP NO. 080909

157
March 5, 2009

REQUEST FOR PROPOSAL

TRI-UNIVERSITY FURNITURE CONTRACT

RFP NO. 080909

DUE: 3:00 P.M., M.S.T., 4/06/09

Time and Date of Pre-Proposal Conference, 9:30 A.M., M.S.T., 03/10/09

Deadline for Inquiries 5:00 P.M., M.S.T., 03/30/09

Time and Date Set for Closing, 3:00 P.M., M.S.T., 04/06/09

158
 TABLE OF CONTENTS

TITLE PAGE
SECTION I – REQUEST FOR PROPOSAL ........................................ 160

SECTION II - PURPOSE OF THE RFP ............................................... 161

SECTION III – PRE-PROPOSAL CONFERENCE .............................. 165

SECTION IV – INSTRUCTIONS TO PROPOSERS ............................ 166

SECTION V – PROGRAM AND SERVICE EXPECTATIONS............. 177

SECTION VI - Green Purchasing Requirements/Specifications .......... 181

SECTION VII - evaluation AND PROCESS OVERVIEW .................... 182

SECTION VIII – FINANCIAL PROPOSAL ........................................... 187

SECTION IX – FORM OF PROPOSAL/SPECIAL INSTRUCTIONS... 189

SECTION X – PROPOSER INQUIRY FORM ...................................... 191

SECTION XI – TERMS & CONDITIONS ............................................. 192

SECTION XII – MANDATORY CERTIFICATIONS & SUBSTITUTE

W-9 ............................................................................................ 206

ATTACHMENT 1 – RISK ASSESSMENT AND

VALUE ADDED PLAN ............................................................... 225

ATTACHMENT 2 – PAST PERFORMANCE INFORMATION............. 227

ATTACHMENT 3 – PROPOSAL FORM .............................................. 245

ATTACHMENT 4 – PRE-PLANNING & qc PERIOD ........................... 246

ATTACHMENT 5 – VENDOR SUBMITTAL FORMS ........................... 251

159
SECTION I – REQUEST FOR PROPOSAL

RFP NO. 080909

Arizona State University is requesting sealed proposals from

qualified firms or individuals for Tri-University Furniture Contract.

Proposals are to be addressed and delivered to the receptionist

area, first floor, University Services Building, Purchasing and
Business Services, Arizona State University, 1551 S Rural Road,
(located on the east side of Rural Road between Apache Road &
Broadway Road) Tempe, Arizona 85281 on or before 3:00 P.M.,
M.S.T., 04/06/09 at which time a representative of Purchasing and
Business Services will announce publicly the names of those firms
or individuals submitting proposals. No other public disclosure will
be made until after award of the contract.

Arizona State University’s Overnight Delivery (FedEx, Airborne, and

UPS. etc.) address is:

Purchasing and Business Services

University Services Building

Arizona State University

1551 S. Rural Rd
Tempe, AZ 85281

Arizona State University’s U.S. Postal Service Mail address is:

Purchasing and Business Services

Arizona State University
P.O. Box 875212
Tempe, AZ 85287-5212

ARIZONA STATE UNIVERSITY

_____Liz Chandler_______________
Liz Chandler, C.P.M.
Purchasing Manager
EC

160
SECTION II - PURPOSE OF THE RFP

1. INTENT

The intent of this Request for Proposal (RFP) is to award term

furniture agreement(s) to meet the majority of the office and
classroom furniture needs of the three Arizona Universities. Our
intent is not just to purchase furniture; we want to buy improved
usability of interior space through the proper selection and
installation of furnishings. We are looking for suppliers who can
demonstrate the ability to provide value to the Universities by
managing the furniture procurement process from start to finish;
providing commercial grade furniture while remaining cognizant of
the fact that we are a state funded entity; and having the ability to
foresee and minimize the risks that are common to this type of
procurement.

Procurements for new construction and/or major remodeling with a

net value of $250,000.00 or greater may, at the option of the
individual participating University, be bid and purchased separately
from this contract.

The current agreements are for systems furniture, case goods -

both wood & metal, filing and shelving, tables, and seating.
Contract service requirements include design service, sales
support, receiving, installation, and warranty repair. The
Universities are continuing the expansion of the product offering for
this proposal to include not only the items listed above, but also
other products within the successful manufacturer’s product line.
The intent of this contractual agreement for the Primary product
awards is to allow the campus customer to select systems furniture
and/or products of a similar design from one manufacturer’s
product line; furniture that will provide for a variety of usage,
function and price considerations with like finishes, product design
and style. We are also encouraging proposers to include
supplemental product lines, i.e., ergonomic products, fixed seating,
computer support furniture. These additions would not be
mandatory use but would be available to allow end-users to fulfill
the scope of a project using one supplier.

161
All projects will require diverse product solutions. The service focus
of the contract will require that proposers provide a well-staffed,
experienced project management team. We want to ensure that
we have strategic partnerships with the successful proposers that
will allow us to service the departmental purchases with a minimum
of resources and also provide the procurement support needed for
the capital building projects.

• PRIMARY PRODUCT/SERVICE AWARDS

Three Primary Awards will be made to the Suppliers offering

products from one manufacturer that will provide for the needs of a
diverse group of campus customers by providing service
requirements and quality products with similar design features,
fabrics and paint finishes. The top three suppliers will be able to
compete for any new projects. The service requirements will
include full support of the product from initial customer contact,
through design, order entry, delivery, installation, and warranty
considerations.

• BUDGET PRODUCT/SERVICE AWARD

This award exists to offer end-users a low-cost furniture option.

Similar to the Primary Awards, this award will be made to a
Supplier offering product from one manufacturer that will provide a
broad group of product offering. The service requirements will
include full support of the product from initial customer contact,
through design, order entry, delivery, installation, and warranty
considerations. .

• SECONDARY AWARDS

Secondary Awards will be made only for those products where

there may be a need to match existing furniture installations. The
Universities currently have a significant investment in Steelcase,
Herman Miller & Knoll furniture. Secondary agreements will not be
awarded for products covered by a Primary Product award. All
Secondary Award suppliers will implement the Best Value
practices.

The Universities desire to place orders with all of the successful

proposer(s) under this solicitation via any electronic methods of
ordering offered by the successful proposer(s), and to make
payment for these orders with a Visa Card.

162
 2. BACKGROUND INFORMATION

The three Arizona universities – Arizona State University, Northern

Arizona University and University of Arizona – have utilized the Tri-
University Furniture Contract since 1995. While each university
handles procurements from the contract differently, our combined
purpose is to provide cost-effective, high quality product in a timely
manner to the university community.

Due to the economy and state budget issues, we are unable to

predict the volume of business to be realized by this contract over
the term. We can provide some recent historical data. Our fiscal
year runs from July 1 to June 30.

ASU
FY 2008 YTD FY 2009 TOTAL %
Primary $10,500,000 $2,200,000 $12,700,000 89%
Budget $600,000 $75,000 $675,000 5%
Secondary $800,000 $150,000 $950,000 7%
TOTAL $11,900,000 $2,425,000

UA
FY 2008 YTD FY 2009 TOTAL %
Primary $4,266,280 $1,438,861 $5,705,141 93%
Budget $124,331 $53,405 $177,736 3%
Secondary $68,989 $214,560 $283,549 5%
TOTAL $4,459,600 $1,706,826

163
NAU
FY 2008 YTD FY 2009 TOTAL %
Primary $2,000,000 $1,000,000 $3,000,000 99%
Budget $27,500 $0 $27,500 1%
Secondary $11,760 $0 $11,760 0%
TOTAL $2,039,260 $1,000,000

3. TERM OF CONTRACT

The base term for any agreement(s) resulting from this Request for
Proposal shall be for three (3) years, commencing on July 1, 2009,
or from date of actual award, whichever is later. However, the
Universities may, upon mutual agreement by both parties to the
agreement, elect to extend such agreement for two (2) additional
one (1) year term periods for a potential maximum term of five (5)
years ending June 30, 2014. The scope of the agreement shall
include the following campuses: the University of Arizona, in
Tucson; the University of Arizona South in Sierra Vista; Northern
Arizona University in Flagstaff and Distance Learning sites t
throughout Arizona; Arizona State University at the Tempe,
Polytechnic, Downtown and West campuses. Pima Community
College District has also been an historical user of this contract.

164
SECTION III – PRE-PROPOSAL CONFERENCE

No pre-proposal conference will be held.

√ A pre-proposal conference will be held at 9:30 A.M., M.S.T.,

March 10, 2009 in ASU Tempe Campus, Schwada Classroom &
Office Building, Room 150 .

The purpose of this conference will be to clarify the contents of this

Request for Proposal in order to prevent any misunderstanding of the
University's intention and desires, and/or to give prospective suppliers an
opportunity to review the site of the work. Any doubt as to the
requirements of this Request for Proposal, or any apparent omission or
discrepancy should be presented to the University representative at this
conference. The University representative will then determine the
appropriate action. If necessary, the University representative will issue a
written amendment to the Request for Proposal. Oral statements or
instructions shall not constitute an amendment to this Request for
Proposal.

You do not have to send a representative to this pre-proposal conference.

However, if you decide to not send a representative, then we may not
know of your intent to participate in this solicitation, and so may not send
you any written amendments to this Request for Proposal. Further, we will
assume that your failure to attend the pre-proposal conference is an
indication that you expect us to review your proposal as if you had taken
advantage of the pre-proposal conference.

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SECTION IV – INSTRUCTIONS TO PROPOSERS

1. You must address and deliver your proposal to the receptionist

area, first floor, University Services Building, Purchasing and
Business Services, Arizona State University, 1551 S Rural Road,
Tempe, Arizona 85281, on or before the time and date set for
closing. The University Services Building is located on the east
side of Rural Road between Apache Road & Broadway Road. Our
delivery address is Purchasing and Business Services, University
Services Building, Arizona State University, 1551 S Rural Road,
Tempe, Arizona 85281. Proposals should be in a sealed envelope
marked:

Name of Proposer
Title of Proposal
RFP Number
Date and Time Proposal is Due

No telephone, electronic or facsimile proposals will be considered.

Proposals received after the time and date for closing will be
returned to the proposer unopened.

2. DIRECTIONS TO USB VISITOR PARKING. Purchasing and

Business Services is in the University Services Building (USB)
1551 S. Rural Road, Tempe AZ, 85281 (located on the east side of
Rural between Broadway Ave and Apache Boulevard). Visitors may
park in the USB Lot 45, located directly behind the building, using
the Pay by Space machine, which has a cost of $2.00 per two hour
or any portion thereof. The meter will be located near the main
entry to USB, to allow visitors to park their vehicles and easily
access the machine on their way into the building.

All visitors to USB are to obtain a visitor’s badge from the USB
Reception Desk to wear while in the building, please check in at the
USB Reception Desk. The receptionist will call to have you
escorted to your meeting.

3. Proposals should be submitted as a document set, containing one

clearly marked original and seven ( 7 ) additional copies.

4. Proposer should use recycled paper and double-sided copying for

the production of all printed and photocopied proposal documents.
However, client performance surveys should be singled-sided.

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 Furthermore, the documents should be clearly marked to indicate
that they are printed on recycled content (minimum 30% post-
consumer waste paper.

5. You may withdraw your proposal at any time prior to the time and
date set for closing.

6. No department, school, or office at the University has the authority

to solicit or receive official proposals other than Purchasing and
Business Services. All solicitation is performed under the direct
supervision of the Director of Purchasing and Business Services
and in complete accordance with University policies and
procedures.

7. The University reserves the right to conduct discussions with

proposers, and to accept revisions of proposals, and to negotiate
price changes. During this discussion period, the University will not
disclose any information derived from proposals submitted, or from
discussions with other proposers. Once an award is made, the
solicitation file, and the proposals contained therein, are in the
public record and will be disclosed upon request.

8. Proposers submitting proposals which meet the selection criteria

and which are deemed to be the most advantageous to the
University may be requested to give an oral presentation to a
selection committee. Purchasing and Business Services will do the
scheduling of these oral presentations.

9. The award shall be made to the responsible proposer whose

proposal is determined to be the most advantageous to the
University based on the evaluation factors set forth in this Request
for Proposal. Price, although a consideration, will not be the sole
determining factor.

10. If you are submitting any information you consider to be proprietary,

you must place it in a separate envelope and mark it "Proprietary
Information". If the Director of Purchasing and Business Services
concurs, this information will not be considered public information.
The Director of Purchasing and Business Services is the final
authority as to the extent of material, which is considered
proprietary or confidential. Pricing information cannot be
considered proprietary.

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11. The University is committed to the development of Small
Business and Small Disadvantaged Business (SB & SDB)
suppliers. If subcontracting is necessary, the successful
proposer will make every effort to use SB & SDB in the
performance of any contract resulting from this Request for
Proposal. A report may be required at each annual
anniversary date and at the completion of the contract
indicating the extent of SB & SDB participation. A description
of the proposer's expected efforts to solicit SB & SDB
participation should be enclosed with your proposal.

12. Your proposal should be submitted in the format shown in Section

IX. Proposals in any other format will be considered informal and
may be rejected. Conditional proposals will not be considered. An
individual authorized to extend a formal proposal must sign all
proposals. Proposals that are not signed may be rejected.

13. Financial Statements:

Option A. Proposers who have audited financial statements

provide the following:

Audited financial statements for the two (2) most recent available
years. If the financial statements are intended to be confidential,
please submit one (1) copy in a separate sealed envelope and
mark as follows:

Firm’s Name
Confidential – Financial Statements

Option B. Proposers who might not have audited financial

statements provide the following:

It is preferred that audited financial statements for the two (2) most
recent available years be submitted. However, if not available,
provide a copy of firm’s two (2) most recent tax returns or compiled
financial statements by an independent CPA. If the financial
statements or tax returns are intended to be confidential, please
submit one (1) copy in a separate sealed envelope and mark as
follows:

Firm’s Name
Confidential – Financial Statements

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14. The University reserves the right to reject any or all proposals or
any part thereof, or to accept any proposal, or any part thereof, or
to withhold the award and to waive or decline to waive irregularities
in any proposal when it determines that it is in its best interest to do
so. The University also reserves the right to hold all proposals for a
period of 60 days after the opening date and the right to accept a
proposal not withdrawn before the scheduled proposal opening
date.

15. EXCEPTIONS: The successful proposer is expected to enter into a

standard form of agreement approved by the Arizona Board of
Regents. The Arizona State University contract terms and
conditions are included in this Request for Proposal in Section XI.
These terms and conditions are intended to be incorporated into
the agreement between the University and the successful proposer.
Proposals that are contingent upon any changes to these
mandatory contract terms and conditions may be deemed
nonresponsive and may be rejected.

16. Unless specifically stated to the contrary, any manufacturer's

names, trade names, brand names or catalog numbers used in the
specifications of this Request for Proposal are for the purpose of
describing and/or establishing the quality, design and performance
required. Any such reference is not intended to limit or restrict an
offer by any proposer and is included in order to advise the
potential proposer of the requirements for the University. Any offer,
which proposes like quality, design or performance, will be
considered.

17. May: Indicates something that is not mandatory but

permissible/ desirable.

Shall, Must, Will: Indicates mandatory requirement. Failure to

meet these mandatory requirements will result
in rejection of your proposal as non-
responsive.

Should: Indicates something that is recommended but

not mandatory. If the proposer fails to provide
recommended information, the University may,
at its sole option, ask the proposer to provide
the information or evaluate the proposal
without the information.

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18. Any person, firm, corporation or association submitting a proposal
shall be deemed to have read and understood all the terms,
conditions and requirements in the specifications/scope of work.

19. All responses and accompanying documentation will become the

property of the University at the time the proposals are opened.

20. The University of Arizona, Northern Arizona University, and Arizona

State University are all state universities governed by the Arizona
Board of Regents. Unless reasonable objection is made in
writing as part of your response to this solicitation, the Board
or either of the other two Universities may purchase goods
and/or services from any agreement resulting from this
solicitation.

21. The University has entered into Cooperative Purchasing

Agreements with The Maricopa County Community College District
and with Maricopa County, in accordance with A.R.S. Sections 11-
952 and 41-2632. Under these Cooperative Purchasing
Agreements, and with the concurrence of the successful proposer,
the Community College District and/or Maricopa County may
access an Agreement resulting from a solicitation done by the
University. If you do not want to grant such access to the Maricopa
County Community College District and or Maricopa County,
please so state in your proposal. In the absence of a statement to
the contrary, the University will assume that you do wish to grant
access to any Agreement that may result from this Request for
Proposal.

22. Arizona State University is also a member of the Strategic Alliance

for Volume Expenditures ($AVE) cooperative purchasing group.
$AVE includes the State of Arizona, many Phoenix metropolitan
area municipalities, and many K-12 unified school districts. Under
the $AVE Cooperative Purchasing Agreement, and with the
concurrence of the successful contractor under this solicitation, a
member of $AVE may access an Agreement resulting from a
solicitation done by the University. If you do not want to grant such
access to a member of $AVE, please so state in your proposal. In
the absence of a statement to the contrary, the University will
assume that you do wish to grant access to any Agreement that
may result from this Request for Proposal.

23. All formal inquiries or requests for significant or material clarification

or interpretation, or notification to the University of errors or

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 omissions relating to this Request for Proposal must be directed, in
writing or by facsimile, to:

Liz Chandler
Purchasing and Business Services
University Services Building
Arizona State University
PO Box 875212
Tempe, AZ 85287-5212

Tel: 480-965-0578
Fax: 480-965-0586
e-mail: liz.chandler@asu.edu

Requests must be submitted on a copy of the Proposer Inquiry

Form included in Section X of this Request for Proposal. All formal
inquiries must be submitted at least seven (7) calendar days before
the time and date set for closing this Request for Proposal. Failure
to submit inquiries by this deadline may result in the inquiry not
being answered.

Note that the University will answer informal questions orally. The
University makes no warranty of any kind as to the correctness of
any oral answers and uses this process solely to provide minor
clarifications rapidly. Oral statements or instructions shall not
constitute an amendment to this Request for Proposal. Proposers
shall not rely on any verbal responses from the University. If you
have formal questions about any part of this Request for Proposal,
which could result in a material issue or a formal amendment to this
Request for Proposal, submit your questions on a Proposer Inquiry
Form from Section X of this Request for Proposal.

24. The University shall not reimburse any proposer the cost of
responding to a Request for Proposal.

25. In accordance with an executive order titled “Air Pollution

Emergency Proclamation” modified by the Governor of Arizona on
July 16, 1996, the University formally requests that all products
used in the performance of any contract that results from this
solicitation be of low- or no-content of reactive organic compounds,
to the maximum extent possible.

26. Arizona requires that we purchase ENERGY STAR® products or

those certified by the Federal Energy Management Program as

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 energy efficient in all categories available. If this solicitation is for a
product in a category for which ENERGY STAR® or certified
products are available, please submit evidence of the ENERGY
STAR® status or certification for the products you are bidding.
Please note that if you fail to submit this information but a
competitor does, we will select your competitor’s product as
meeting specifications and deem your product as not meeting
specifications. See A.R.S. §34-451.

27. The University requires that all desktop computers, notebooks, and
monitors purchased must meet, at a minimum, all Electronic
Product Environmental Assessment Tool (EPEAT) environmental
criteria designated as “required” (bronze registration) or higher as
contained in the IEEE 1680 Standard for the Environmental
Assessment of Personal Computer Products. Additional
consideration will be provided for electronic products that have
achieved EPEAT silver or gold registration. The registration criteria
and a list of all registered equipment are at http://www.epeat.net on
the Web.

28. To the extent applicable to any agreement resulting from this

solicitation, the proposer shall comply with the Standards for
Privacy of Individually Identifiable Information under the Health
Insurance Portability and Accountability Act of 1996 contained in 45
CFR Parts 160 and 164 (the “HIPAA Privacy Standards”) as of the
effective date of the HIPAA Privacy Standards on April 14, 2003 or
as later determined. Proposer will use all security and privacy
safeguards necessary to protect Protected Health Information
(PHI), as defined by HIPPA, and shall immediately report to
University all improper use or disclosure of PHI of which it becomes
aware. Proposer agrees to ensure that its agents and
subcontractors agree to and abide by these requirements.
Proposer agrees to indemnify the State of Arizona, the Arizona
Board of Regents, Arizona State University and their regents,
employees and agents against all harm or damage caused or
contributed to by Proposer’s breach of its obligations under this
paragraph.

29. The University believes that it can best maintain its reputation for
treating suppliers in a fair, honest, and consistent manner by
conducting solicitations in good faith and by granting competitors
an equal opportunity to win an award. If you feel that we have
fallen short of these goals, you may submit a protest pursuant to
the Arizona Board of Regents procurement procedures, section 3-

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809, in particular section 3-809C. This paragraph does not include
all of the provisions of the Regents procedures, but it does tell you
what you have to do to initiate a protest. First, you have to be an
"interested party." An "interested party" is an actual or prospective
proposer whose direct economic interest may be affected by the
issuance of a solicitation, the award of a contract, or by the failure
to award a contract. Whether an actual prospective bidder or offeror
has a direct economic interest will depend upon the circumstances
in each case. At a minimum, the interest must be substantial and
must be tangibly affected by the administrative action or proposed
action concerned in the case. For instance, a bidder or proposer
who is fourth in line for award does not have a sufficient economic
interest to protest the proposed award of a contract to the low
bidder. Second, you must submit the protest in a timely manner. In
procurements inviting bids, protests based upon alleged errors,
irregularities or, improprieties in a solicitation that are apparent
before the bid opening shall be filed before the bid opening. In
procurements requesting proposals, protests based upon alleged
errors, irregularities or improprieties in a solicitation that are
apparent before the closing date for receipt of initial proposals shall
be filed before the closing date for receipt of initial proposals.
Protests concerning improprieties that do not exist in the initial
solicitation, but that are subsequently incorporated into the
solicitation, shall be filed by the next closing date for receipt of
proposals following the incorporation. In cases other than those
just covered, protests shall be filed no later than ten days after a
contract is awarded in connection with the procurement action.
Failure to timely protest shall be deemed a waiver of all rights.
Third, and finally, your protest shall be in writing and shall include
the following information: (1) The name, address, telephone
number, and fax number of the protestor; (2) The signature of the
protestor or its representative; (3) Identification of the solicitation or
contract number; (4) A detailed statement of the legal and factual
grounds of the protest including copies of relevant documents; and
(5) The form of relief requested.

Protests should be directed to:

John F. Riley, C.P.M.

Director of Purchasing and Business Services
Arizona State University
PO Box 875212
Tempe AZ 85287-5212
Fax: (480) 965-2234

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 Please note that as the University takes protests very seriously, we
expect you to do so as well. Frivolous protests will not result in
gain for your firm.

30. Other Opportunities with Arizona State University not related to this
solicitation.

The ASU Alumni Advantage

Connect your business with an affluent, educated audience through

a business partnership with the ASU Alumni Association. The
Association is the touchstone for ASU’s 300,000 alumni and
provides valuable connections between them and a wide variety of
businesses. By doing business with ASU, the largest university in
the United States, your company can stand above the competition.

ASU alumni represent a responsive target market for your product

or service.
• Alumni live worldwide.
• 70 percent of alumni reside in Arizona.
• More than 160,000 alumni live in Maricopa County.
• 11 percent of alumni reside in California.
• 75% of ASU alumni are under the age of 45.
• More than 64% of ASU alums graduated since 1984.
• More than one-third hold post-graduate degrees.
• More than 70 percent of ASU alumni are actively employed.
• 30 percent of alumni earn between $60,000 and $90,000
annually.
• 25 percent of ASU alumni earn more than $90,000 annually.

Specific partnership opportunities exist in a variety of areas.

• Advertise in the quarterly ASU Magazine, mailed to more
than 260,000 homes around the world. ASU Magazine is the
largest circulation magazine in the Southwest. Our rate card
is available for download. http://www.asu.edu/alumni/
• Sponsor one of the Association’s many programs and events
and receive recognition and access to targeted audiences.
Events include: Founder’s Day in March, Senior Send off in
April, Homecoming in the Fall, Travel shows, Career Fairs
and many more! Costs from $500 to $2500.
• Create a unique partnership with us to suit your needs.
• Establish benefits for ASU alumni by offering targeted
discounts and services.
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 • Advertise on this Web site or on our 55 Chapter/Club
websites or in our electronic newsletters, sent out to more
than 80,000 people monthly. Cost is $1000 per mo per each
advertising venue.

Your business partnership contact is Rhonda McClintock. Contact

her today to start doing business with the Sun Devil nation. (480)
965-5051.

Sun Devil Sports Marketing

Sun Devil Sports Marketing is the exclusive marketing and

corporate sponsorship partner for Arizona State University Athletics
and manages all corporate marketing opportunities surrounding
Sun Devil Athletics, including on-premise signage, TV, radio, print,
internet, premium hospitality, event marketing and promotions. If
you are interested in partnering with ASU Athletics, please contact
Steve Hank at 480-727-0104 or at steven.hank@asu.edu.

Arizona PBS Delivers…

Eight, Arizona PBS, delivers award-winning, educational, cultural

and current events programming to approximately 1.5 million
viewers each week. Become an Eight sponsor.

• Eight delivers – reach. Comparable to other TV channels,

well beyond cable channels and way beyond the top local
radio stations and print media. Eight / KAET reaches 85
percent of the people of Arizona.
• Eight delivers – quality audience. Business leaders,
decision makers, high income households, educated citizens
& boomers and spenders with disposable income.
• Eight delivers – marketing benefits:
• Build brand awareness by linking your business with
high-quality programs
• Generate community goodwill through support of
public television
• Promote your offerings to a broad audience at an
affordable price
• Market your brand in an environment free of
commercial clutter
• Eight delivers – multiple media platforms:
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 • TV – Channel 8 and DTV 8.1, 8.2 & 8.3
• Eight Magazine – 50,000 households each month
• Web views – www.azpbs.org (100,000 unique visitors
a month)
• E-Marketing – 40,000 email addresses … and more.
Contact: Morrie Puzzi, Corporate Support Manager at 602-496-
8550 or mpuzzi@asu.edu.

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SECTION V – PROGRAM AND SERVICE EXPECTATIONS

5.1. The work consists in general, of supplying office and classroom

furniture as required by the three Arizona Universities and other
public institutions. The Supplier will be required to provide services
associated with the supplying of furniture. These services include
installation, design, training, and the provision of samples of
contracted items.

5.2. The agreement will be performed under contract between the

Arizona Board of Regents and the successful Supplier(s) and will
be administered by Arizona State University.

5.3. The Universities have made a commitment to procurement of

sustainable furnishings and those that contribute to LEED™
certification. Supplier shall state their commitment to sustainability
and how they can assist the Universities in their quest for
certification and green buildings.

5.4. Supplier shall maintain in current status all federal, state, and local
licenses and permits that may be required for the business
conducted by the Supplier and applicable for the work to be
required under this agreement.

5.5. ARIZONA STATE UNIVERSITY

ASU will be utilizing the Tri-University Furniture contract to cover

both departmental purchases and capital building projects. We are
requiring that the Supplier provide support for the departmental
purchases via electronic access. We expect that departments will
be able to select, purchase and track their own orders. ASU has
adopted a Visa Card from JP Morgan Chase Bank as its
Purchasing Card. The University is also very interested in adopting
electronic methods of ordering from Suppliers and in making
associated payments with its Purchasing Card.

5.6. NORTHERN ARIZONA UNIVERSITY

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 Successful supplier(s) shall assist NAU departments with the
selection of contract products based on their requirements. If
design service is required, the Supplier’s representative will be
requested by Purchasing Services to meet with the department.
This is usually required only for systems furniture and related
products and may include CAD drawings and a submitted quote to
include installed pricing with a CAPS list.

5.7. UNIVERSITY OF ARIZONA

The University of Arizona has seen tremendous growth over the

past five years. Many new buildings came online and while the
growth will slow down somewhat in the foreseeable future, we
expect additional capital projects to be funded during this new
contract period. The majority of furniture purchased at the
University of Arizona is office seating, systems furniture & case
goods. The Primary Award supplier’s representative will be
required at the request of Purchasing to work with each end user to
develop a furniture specification sheet and price quotes. This quote
will contain model and catalog numbers, paint colors, laminate
types, fabric selections, drawer configurations, price, etc. A copy
shall be forwarded to the Purchasing Office. If a product is required
that is not available on this RFP, the Purchasing Department will
solicit information and pricing through alternate Vendors. Any such
purchases of $50,000.00 or more and outside the contract will
require a competitive sealed bid; any purchases under $50,000.00
and outside the contract may be bid or purchased at the discretion
of the Purchasing Department. As Arizona Buyways (our E-
Commerce solution) continues to grow, we are looking to work with
furniture companies that have the proven ability to allow for online
order placement as well as payment with our P-Card (Visa).

5.8. Current Primary Award contract holder is Steelcase. Current

Primary Budget Award contract holder is Hon. Proposals must
include pricing for equivalent quality and breadth-of-line products.

5.9. Proposals must include a statement from the manufacturer(s) that

indicates that the manufacturer will stand behind any agreement
awarded as a result of this RFP. That, in the event the supplier
who wins the award is unable to meet the requirements of the
agreement, for any reason, then the manufacturer shall ensure
continuity of service, either themselves, or through another
supplier.

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5.10. Each of the participating Universities may undertake or award other
agreements for additional FF&E or related work and the Supplier
awarded a Universities furniture agreement shall fully cooperate
with such other selected contractor(s) and Universities employees
and carefully fit their own work with such other additional work. The
Supplier shall not commit or permit any act, which will interfere with
the performance of work by other contractor(s) or Universities
employees.

5.11. All pricing shall be F.O.B. destination freight prepaid to the

Universities’ locations (i.e., Tucson, Tempe, Phoenix, Chandler,
Flagstaff, Yuma and Sierra Vista) etc. There shall be NO trip
charges, travel, per diem, delivery or any other additional fees
assessed to any participating University or other entity under a
resulting agreement. Supplier shall make service trips as
requested by the Universities with no additional trip charges, per
diem, delivery or any other additional fees associated with delivery.

5.12. Supplier shall furnish the Universities a usage report semi-annually

delineating the acquisition activity governed by the agreement.
This usage report shall be issued to each of the Universities. The
format of this report shall be approved by the Universities and shall
disclose the quantity and the dollar value of each agreement
product or material by the individual Universities institution.

5.13. Supplier shall obtain all parking permits and/or decals required
while performing work on universities premises and must adhere to
specific University requirements for access and . A cost may be
incurred by the Supplier to obtain said permits.

5.14. Supplier shall make a diligent attempt to cause applicable

packaging to be recycled. Supplier is encouraged, as a
convenience, to contact the university's recycling center to verify if
university will accept any recyclable discards.

5.15. Proposer’s response must include provision for no-charge design

services for product and material proposed to be completed at the
end users location using available technology.

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5.16. It is essential that the Proposer provide an adequate staff of
experienced sales and design personnel that are capable of and
devoted to the successful accomplishment of the complete
customer services to be provided under the Universities furniture
agreement including departmental purchases and capital projects.
Once such personnel are assigned to work under the agreement,
sales and design personnel shall not be removed or replaced
without prior written approval of the Universities. Conversely, the
Universities may request of the Supplier that sales and/or design
personnel be replaced in their respective assignments if they
continually fail to provide the level of customer services necessary
in support of the furniture agreement.

5.17. Each individual University shall have the option to determine

whether design services will be performed by the Proposer, by an
independent third-party design company, or in-house.

5.18. Each of the three University locations (Arizona State University in

Tempe, Northern Arizona University in Flagstaff, and The University
of Arizona in Tucson) require that each successful Supplier provide
representative samples of the furniture product awarded on the
agreement. Such product samples are to be provided to each of
the three designated locations at no cost to the Universities, to
include delivery, installation, uninstall, removal, return and any
relocation(s) if required. ASU and NAU have a product showroom
on site, U of A will require a supplier managed showroom in close
proximity to the University.

5.19. The Universities desire to place orders with the successful

proposer(s) under this solicitation via any electronic methods of
ordering offered by the successful proposer(s), and to make
payment for these orders with a Visa Card.

5.20. The Universities require that the successful proposer implement

some type of electronic commerce system. Vendor will be
required to work with each campus to secure campus requirements
and time frame for establishing on-line tools for e-business
including, but not limited to: contract information, catalogs, ordering,
tracking, expediting.

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SECTION VI - Green Purchasing Requirements/Specifications

In order to reduce the adverse environmental impact of our purchasing

decisions we are committed to buy goods and services from
manufacturers and suppliers who share our environmental concern and
commitment. Green purchasing is the method wherein environmental and
social considerations are taken with equal weight to the price, availability
and performance criteria that we use to make purchasing decisions.

Proposer/Bidder shall use environmentally preferable products, materials

and companies where economically feasible. Environmentally preferable
products have a less or reduced effect on human health and the
environment when compared to other products and companies that serve
the same purpose. If two products are equal in performance
characteristics and the pricing is within 5%, the university will favor the
more environmentally preferable product and company.

If you are citing environmentally preferred product claims, you must

provide proper certification or detailed information on environmental
benefits, durability and recyclable properties.

The University and the supplier may negotiate during the contract term to
permit the substitution or addition of Environmentally Preferable Products
(EPPs) when such products are readily available at a competitive cost and
satisfy the university’s performance needs.

Unless otherwise specified, bidders/proposers and contractors should use

recycled paper and double-sided coping for the production of all printed
and photocopied documents. Furthermore, the documents shall be clearly
marked to indicate that they are printed on recycled content (minimum
30% post-consumer waste) paper.

Proposer/Bidder shall provide packaging/packing materials that meet at

least one of, and preferably, all of the following criteria:
Made from 100% post-consumer recycled materials;
Be recyclable;
Reusable;
Non-toxic;
Bio-degradable.

This information will be used as part of the evaluation criteria for

Supplier/Proposer Sustainability efforts for the RFP process.

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SECTION VII - evaluation AND PROCESS OVERVIEW

BEST VALUE PROCESS OVERVIEW

The Universities are applying a best value process to the supplier

selection and implementation for the delivery of this service. The best
value process consists of three primary stages: 1) Selection, 2) Pre-
planning and Quality Control, and 3) Management by Risk Minimization
and Performance Measurement.

The Selection phase of the best value process focuses on a Proposing

team’s ability to differentiate itself based upon the ability to identify,
prioritize, and minimize risks, add differential value to the Universities and
show a high level of past performance on behalf of other clients. The
Universities are allowing Proposing teams to compete based on value and
their ability to maximize the Universities’ satisfaction. Consequently, the
submitted proposals should be brief, show differentiation, and allow the
Universities to make a data-based decision on which is the best value
supplier for the Universities.

It is imperative that each Proposing team realize that what is written in the
proposals and discussed in the interview will become part of the
successful Proposing team’s final contract.

The second phase of the best value system is a Pre-planning and Quality
Control period that takes place prior to each award of the contract. Three
suppliers for the Primary Award group, one supplier for the Budget Award
group, and any Secondary Award suppliers will move forward to the Pre-
Award period. In the Pre-Planning and Quality Control stage the identified
potential best value suppliers will provide the Universities with (See
Attachment 4 for more details):

1. A detailed scope of services and plan(s) to provide those services.

2. A Quality Control Plan that will include:

a. Risk identification and minimization plans for all risks

identified, including client generated risks, concerns, and
issues. The supplier will be expected to itemize what risks it
controls and does not control. For those risks the supplier
does not control, the supplier must propose a plan on how
those risks will be minimized.

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 b. List of University action items and requirements. The list
must include item/task/ expectation, date required, and the
actual person in the University organization that is
responsible for fulfilling the need.
c. A detailed schedule for transition (if necessary) and all
implementation.
d. Implementation plan for the Tri-University Risk Minimization
and Performance Measurement report that will be used
during the life of the contract to track and document risks
and performance metrics.

After the Pre-planning and Quality Control period has fulfilled the needs
and satisfaction of the University and the Supplier, the Supplier will be
contracted.

The third phase of the best value system is the Management by Risk
Minimization and Performance Metrics for the life of the contract. The
successful proposing supplier (for each award) will be expected to report
regularly (for the life of the contract) on the performance and risk level of
the service. The successful proposing supplier must establish a system
that can track and document the risk and performance of the project for
the Universities’ use in monitoring the contract.

SELECTION AND EVALUATION CRITERIA:

The awards will be made to the responsible Suppliers whose proposal is

determined to be the most advantageous to the Universities, based on the
following criteria (in order of importance):

1. Interview
2. Risk Assessment and Value Added Plan
3. Service Proposal
4. Financial Proposal
5. Past Performance Information of the Supplier

Risk-Assessment and Value Added (RAVA) Plan

Each proposing team will submit a three (3)-page Risk Assessment and
Value Added plan for the project services being provided. A guide on how
to prepare a RAVA Plan can be found in Attachment 1. The RAVA Plan
must:

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 • Identify and describe any potential risks, specifically risks the
Supplier does not control.
• Identify how the Supplier will minimize the risks
• Identify any items/ideas that will be used to add value to the
Universities and/or the Service
• Identify a Transition Milestone Plan

Each RAVA Plan must be three pages or less. The Risk Assessment and
Value Added section must be no longer than two (2) pages and the
Transition Milestone Plan must be no longer than one (1) page. The RAVA
Plan must not have any names in it (supplier, product, past project names,
company letterhead, etc). A format with additional information is provided
in Attachment 1.

Service Proposal

Proposers are required to submit a two (2) page Service Proposal

describing how they plan to service the needs of the three Universities,
with both departmental and capital projects. General requirements of the
Universities are shown in Section V.

The Service Plan should include (in non-technical terms):

• An outline of what the proposer is going to do

• What will transpire as a result of above actions
• Show why/how Proposer knows the service is doable within the
Universities’ constraints and needs

Once again, this criterion will be rated blind. Therefore, the Service Plan
must have no names or any other information that will indicate the identity
of the Proposer on/in it (no Proposer name, Proposer personnel, product,
past project names, company letterhead, etc).

Financial Proposal

Financial proposal information must be submitted according to the

instruction in Section VIII - Financial Proposal.

Past Performance Information of the Supplier

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Past Performance Information is required for each proposing Supplier.
Each Proposing team entity is responsible for preparing a list of past
and/or current clients and sending performance surveys to the
past/current clients. Surveys from a Supplier’s past clients will be returned
to the Supplier, which will be submitted as part of the Supplier’s proposal.
Information on how to prepare the list of past clients and how to send out
the surveys can be found in Attachment 2. Past/current performance
information will be collected on the proposing firm from:

• Manufacturer’s Representative
• Dealer’s Representative
• Lead Designer
• Lead Installer

Submittal Proposal Form- REQUIRED

Attach the Submittal Proposal Form (Attachment 3) to the front of the

Proposing team’s RAVA Plan. This form will be used to maintain the
anonymity of the Proposing teams’ RAVA plans.

SHORTLISTING OCCURS BASED ON THE ABOVE CRITERIA

The above criteria - RAVA, Service Proposal, Financial Proposal and Past
Performance Information - will be used to shortlist the number of
Proposers to between three and five. Once shortlisted, those Proposing
teams will be interviewed.

Interview

After the above criteria are evaluated, the Universities will shortlist to three
to five Proposing teams. From the shortlisted Proposing teams, the
Universities may interview the Manufacturer’s Representative, Dealer’s
Representative, Lead Designer and Lead Installer for each proposing
team. The individual(s) interviewed must be the actual personnel the
University will be working with on the account. The Universities will not
allow a personnel switch unless it is the best interest of the Universities.

BEST VALUE SUPPLIER SELECTION OCCURS

Preplanning and Quality Control

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Once the Universities have identified the three potential best value
Suppliers based upon the above criteria, the identified supplier will
proceed into a Pre-Planning and Quality Control period prior to the award
of the contract. The requirements of the Pre-planning and Quality Control
period are in Attachment 4.

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SECTION VIII – FINANCIAL PROPOSAL

List each product line you are offering for this contract. List all values as
percentages. The “Install / Delivery” and “Design” categories must be
expressed as a percentage of the product cost, designated as List or Net.
Submit a MS Excel (XLS) version of your financial proposal. You must
use the format in the “Contract Pricing Proposal” table below.

ASU RFP 080909 Tri-University Furniture Contract Pricing Proposal

Proposer:

Manufacturer:

Price List:
Discount off
Line List Install / Delivery Design

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188
SECTION IX – FORM OF PROPOSAL/SPECIAL INSTRUCTIONS

To facilitate direct comparisons, your proposal shall be submitted in the

following format, listed in order, and index tabbed to match. If proposer
fails to provide any of the following information, with the exception of the
mandatory proposal certification, the University may, at its' sole option,
ask the proposer to provide the missing information or evaluate the
proposal without the missing information.

The first sheet of vendor’s proposal should be the “Proposer

Submittal Checklist”, located in the “VENDOR SUBMITTAL FORMS”
section at the end of this RFP.

1. Mandatory certifications and Substitute W-9 as per Section XII.

2. Risk Assessment and Value Added Plan (RAVA Plan) no longer

than two (2) pages, plus one (1) page allowed for the Transition
Milestone Plan for a total of three (3) pages, as follows. The Risk
Assessment and Value Added Plan will become part of the
successful Proposer’s final contract.

a. Each firm must submit a RAVA Plan as described in Attachment

1 and using the format shown therein. The RAVA must NOT
contain any personal names (letterhead, firm name, past
projects, project personnel, or any information that can indicate
who has written the plan). If a RAVA Plan has any personal or
proprietary names, it will be identified as non-responsive. This
is required to minimize evaluator bias.

b. The RAVA Plan contains three sections: 1) Risk Assessment, 2)

Value Added Differentiation, and 3) Transition Milestone Plan.
The Risk Assessment and Value Added Differentiation sections
must not exceed a combined length of two (2) pages. The
Transition Milestone Plan must not exceed one (1) page in
length.

i. The Risk Assessment section should address any risks that

the Proposers see impacting a successful delivery of all
expectations as described in Section V of this RFP. It is the
assumption of the Universities that all Proposers have the
capability to effectively deliver services and meet all the
expectations in Section V. The Universities wish to examine
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 the relative ability of each firm to understand and convey the
key risks to this service and how each risk should be
minimized. Each Proposer should focus on risk that it does
not control, that is to say, the Universities expect each
Proposer to have the capability to manage the risks that they
do control and the Risk Assessment plan should be used to
manage risk that is not controlled by the Proposer The Risk
Assessment plan gives the opportunity for the Proposers to
differentiate their capabilities based on their ability to
understand, see, and minimize risk to the University and the
risk to a successful outcome of this contract

ii. The Value Added section should highlight any areas of

differentiation that the Proposer considers separates them
from the other Proposers. Each Proposer should consider
the question: “What value do I bring that differentiates me
from my competitors.” Marketing material is considered
worthless by the University and will only have a negative
impact on a Proposer’s score. The Value Added
Differentiation section should be used by each Proposer to
show how it will add value, what the size or level of impact
that value will have, and how the level of added value will be
measured during the course of the service. Each value
added option must have an impact on dollars, time, meals,
and/or the satisfaction of the University.

iii. The Transition Milestone Plan should identify key action

steps and milestone dates for transition to the new contract.

3. Service Proposal

4. Financial Proposal

5. Past Performance Information

6. Financial Statements per Section IV.13

7. Exceptions to Terms and Conditions

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SECTION X – PROPOSER INQUIRY FORM

Pre-Proposal Questions, General Clarifications, etc.

PROJECT NAME: Tri-University Furniture Contract

PROPOSAL NUMBER: 080909

INQUIRY DEADLINE: 5:00 P.M., M.S.T., March 30, 2009

QUESTIONS ON: ORIGINAL PROPOSAL or ADDM NO.

SECTION NUMBER:

WRITER:

FAX NO. PHONE NO.

COMPANY:

COMPANY E-MAIL ADDRESS:

DATE:

QUESTIONS:

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SECTION XI – TERMS & CONDITIONS

1. PAYMENT. Payment shall be subject to the provisions of Title 35

of Arizona Revised Statutes relating to time and manner of
submission of claims. The University's obligation is payable only
and solely from funds appropriated for the purpose of this
Agreement. The payment terms for this Agreement are Net 30
days. An invoice shall be submitted directly to the University's
Payables and Reimbursements Department, unless otherwise
directed. Any delays in payment are usually attributable to one of
the following: failure of the supplier to submit an invoice to
Payables and Reimbursements, dissatisfaction of the requesting
department with the order delivered by the supplier, and a variance
of the dollar amounts on the purchase order, the receiver, and the
invoice. The interest rate on overdue payments is eighteen (18)
percent APR. Such interest will begin accruing on the thirty-first
(31st) day after the latest date of: the date of a valid purchase
order, the date a correct supplier invoice is received at Payables
and Reimbursements, and the date of delivery of an order that is
satisfactory to the requesting department. Any claims for interest
must be substantiated by copies of documents that show the date
of the valid purchase order, the date a correct invoice was delivered
to Payables and Reimbursements, and the date an order was
delivered to the requesting department. The University may adjust
the interest period, or deny the interest claim, based upon their
documentation that there was no valid purchase order, that an
incorrect invoice was submitted, that the order delivered was not
satisfactory, or that the dates of any event were other than as
claimed.

2. REMEDIES AND APPLICABLE LAW. This Agreement shall be

governed by and construed in accordance with the laws of the
State of Arizona. The University and Proposer shall have all
remedies afforded each by said law.

3. FORCE MAJEURE. Neither party shall be held responsible for any

losses resulting if the fulfillment of any terms or provisions of this
Agreement are delayed or prevented by any cause not within the
control of the party whose performance is interfered with, and which
by the exercise of reasonable diligence, said party is unable to
prevent.

4. ANTI-KICKBACK. In compliance with FAR 52.203-7, the

University has in place and follows procedures designed to prevent

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 and detect violations of the Anti-Kickback Act of 1986 in its
operations and direct business relationships.

5. GRATUITIES. The University may, by written notice to the

Proposer, cancel this Agreement if it is found by the University that
gratuities, in the form of entertainment, gifts or otherwise, were
offered or given by the Proposer, or any agent or representative of
the Proposer, to any officer or employee of the State of Arizona
with a view toward securing a contract or securing favorable
treatment with respect to the awarding or amending, or the making
of any determinations with respect to the performing of such
contract. In the event this Agreement is canceled by University
pursuant to this provision, the University shall be entitled, in
addition to any other rights and remedies, to recover or withhold the
amount of the cost incurred by Proposer in providing such
gratuities.

6. MODIFICATIONS. This Agreement can be modified or rescinded

only by a writing signed by both parties or their duly authorized
agents.

7. ASSIGNMENT-DELEGATION. No right or interest in this

Agreement shall be assigned, or any obligation delegated, by
Proposer without the written permission of the University. Any
attempted assignment or delegation by Proposer shall be wholly
void and totally ineffective for all purposes unless made in
conformity with this paragraph.

8. INTERPRETATION-PAROL EVIDENCE. This writing is intended

by the parties as a final expression of their Agreement and is
intended also as a complete and exclusive statement of the terms
of their Agreement. No course of prior dealings between the
parties and no usage of the trade shall be relevant to supplement or
explain any term used in this Agreement. Acceptance or
acquiescence in a course of performance rendered under this
Agreement shall not be relevant to determine the meaning of this
Agreement even though the accepting or acquiescing party has
knowledge of the nature of the performance and opportunity for
objection. Whenever a term defined by the Uniform Commercial
Code is used in this Agreement, the definition contained in the
Code is to control.

9. EQUAL OPPORTUNITY CLAUSE. The Provisions of Section 202

of Executive Order 11246.41, C.F.R. §60-1.4.41, C.F.R. §60-250.4

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 and 41, and C.F.R. §60-741.4 are incorporated herein by reference
and shall be applicable to this Agreement unless this Agreement is
exempted under the rules, regulations or orders of the Secretary of
Labor.

10. TERMINATION FOR DEFAULT. In the event that the Proposer

shall fail to maintain or keep in force any of the terms and
conditions of this Agreement, the University may notify the
Proposer in writing of such failure and demand that the same be
remedied within 10 days. Should the Proposer fail to remedy the
same within said period, the University shall then have the right to
terminate this Agreement.

11. NO WAIVER. No waiver by University of any breach of the

provisions of this Agreement by the Proposer shall in any way be
construed to be a waiver of any future breach or bar the University's
right to insist on strict performance of the provisions of the
Agreement.

12. TERMINATION. The University may by written notice, stating the

extent and effective date terminate this order for convenience in
whole or in part, at any time. University shall pay the Proposer as
full compensation for performance until such termination: (1) the
unit or pro rata order price for the delivered and accepted portion;
and (2) a reasonable amount, not otherwise recoverable from other
sources by the Proposer as approved by the University, with
respect to the undelivered or unacceptable portion of this order,
provided compensation hereunder shall in no event exceed the
total order price.

13. CANCELLATION OF STATE CONTRACT. In accordance with

A.R.S. §38-511, this Agreement may be canceled without penalty
or further obligation if any person significantly involved in initiating,
negotiating, securing, drafting or creating the Agreement on behalf
of the University is, at anytime while the Agreement or any
extension of the Agreement is in effect, an employee of any other
party to the Agreement in any capacity or a consultant to any other
party of the Agreement with respect to the subject matter of the
Agreement.

14. LABOR DISPUTES. Proposer shall give prompt notice to the

University of any actual or potential labor dispute which delays or
may delay performance under this Agreement.

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15. CONTRACT CLAIMS AND CONTROVERSIES. All contract
claims and controversies arising under this Agreement shall be
resolved pursuant to the Arizona Board of Regents procurement
procedures, section 3-809, in particular section 3-809C.

16. CANCELLATION FOR LACK OF FUNDING. This Agreement may

be canceled without any further obligation on the part of the Arizona
Board of Regents and Arizona State University in the event that
sufficient appropriated funding is unavailable to assure full
performance of its terms. The Proposer shall be notified in writing
of such non-appropriation at the earliest opportunity.

17. ASSIGNMENT OF ANTI-TRUST OVERCHARGE CLAIMS. The

parties recognize that in actual economic practice overcharges
resulting from anti-trust violations are in fact borne by the ultimate
purchaser; therefore, the Proposer hereby assigns to the Arizona
Board of Regents for and on behalf of the University any and all
claims for such overcharges.

18. INSPECTION AND AUDIT. All books, accounts, reports, files and
other records relating to this Agreement shall be subject at all
reasonable times to inspection and audit by the Arizona Board of
Regents, Arizona State University or the Auditor General of the
State of Arizona, or their agents for five (5) years after completion
of this Agreement. Such records shall be produced at Arizona
State University, or such other location as designated by Arizona
State University, upon reasonable notice to the Proposer.

19. INSOLVENCY. The University shall have the right to terminate this
Agreement at any time in the event Proposer files a petition in
bankruptcy, or is adjudicated bankrupt; or if a petition in bankruptcy
is filed against Proposer and not discharged within thirty (30) days;
or if Proposer becomes insolvent or makes an assignment for the
benefit of its creditors or an arrangement pursuant to any
bankruptcy law; or if a receiver is appointed for Proposer or its
business.

20. ADVERTISING. Proposer agrees that it will not use Arizona State
University or any of its names or trademarks in any Proposer
advertising.

21. INDEMNIFICATION. The parties to this contract agree that the

State of Arizona, its departments, agencies, boards and
commissions shall be indemnified and held harmless by the

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 Proposer for the vicarious liability of the State as a result of entering
into this contract. However, the parties further agree that the State
of Arizona, its departments, agencies, boards and commissions
shall be responsible for its own negligence. Each party to this
contract is responsible for its own negligence.

22. PARKING. The Proposer shall obtain all parking permits and/or
decals required while performing work on University premises. The
Proposer should contact the Parking and Transit Department,
Administration Division at 480-965-6406.

23. OFFSHORE PERFORMANCE OF WORK PROHIBITED. Due to

security and identity protection concerns, direct services under this
contract shall be performed within the borders of the United States.
Any services that are described in the specifications or scope of
work that directly serve Arizona State University and may involve
access to secure or sensitive data or personal client data or
development or modification of software for the University shall be
performed within the borders of the United States. Unless
specifically stated otherwise in the specifications, this definition
does not apply to indirect or "overhead" services, redundant back-
up services or services that are incidental to the performance of the
contract. This provision applies to work performed by
Subcontractors at all tiers.

24. NON-DISCRIMINATION. The successful contractor or supplier

shall comply with all applicable state and federal statutes and
regulations governing Equal Employment Opportunity, Non –
Discrimination, and Immigration.

25. UNIVERSITY WEAPONS POLICY. The University prohibits the

use, possession, display or storage of any weapon, explosive
device or fireworks on all land and buildings owned, leased, or
under the control of the University or its affiliated or related entities,
in all University residential facilities (whether managed by the
University or another entity), in all University vehicles, and at all
University or University affiliate sponsored events and activities.
Notification by Proposer to all persons or entities who are
employees, officers, subcontractors, consultants, agents, guests,
invitees or licensees of Proposer (“Proposer Parties”) of this policy
is a condition and requirement of this Contract. Proposer further
agrees to enforce this contractual requirement against all Proposer
Parties. The University’s policy may be accessed through the

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 following webpage: http://www.asu.edu/aad/manuals/dps/dps201-
05.html.

26. SUSTAINABILITY REQUIRMENTS. Arizona State University is

dedicated to acquiring products and services that meet
Sustainability requirements. Indicate any business practices or
technology that meets the following criteria.

For the purpose of judging Sustainability the following description

applies: A process of current or developing business practices and
technologies that restore and enhance the environment by
supplying products and services that have a lesser or reduced
effect on human health and the environment when compared with
competing products or services that serve the same purpose. This
comparison may consider raw materials acquisition, production,
manufacturing, packaging, distribution, reuse, operation,
maintenance or disposal of the product or service.

27. PAYMENT CARD INDUSTRY DATA SECURITY STANDARD.

For e-commerce business and/or credit card transactions, Proposer
agrees to be bound by the requirements and terms of the Rules of
all applicable Card Associations, as amended from time to time,
and be solely responsible for security and maintaining
confidentiality of Card transactions processed by means of
electronic commerce up to the point of receipt of such transactions
by Bank.

Proposer is required to be in compliance with the requisites of the

SAS 70 and/or Payment Card Industry Data Security Standard and
provide written attestation of compliance annually.

28. BYRD ANTI-LOBBYING AMENDMENT (31 U.S.C. 1352).

Contractors who apply or bid for an award of $100,000 or more
shall file the required certification. Each tier certifies to the tier
above that it will not and has not used Federal appropriated funds
to pay any person or organization for influencing or attempting to
influence an officer or employee of any agency, a member of
Congress, officer or employee of Congress, or an employee of a
member of Congress in connection with obtaining any Federal
contract, grant, or any other award covered by 31 U.S.C. 1352.
Each tier shall also disclose any lobbying with non-Federal funds
that takes place in connection with obtaining and Federal award.
Such disclosures are forwarded from tier to tier up to the recipient.

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29. DEBARMENT AND SUSPENSION. Recipients shall fully comply
with the requirements stipulated in Subpart C of 45 CFR 620,
entitled “Responsibilities of Participants Regarding Transactions”.
The recipient is responsible for ensuring that any lower tier covered
transaction, as described in Subpart B of 45 CFR 620, entitled
“Covered Transactions”, includes a term or condition requiring
compliance with Subpart C. The recipient also is responsible for
further requiring the inclusion of a similar term or condition in any
subsequent lower tier covered transaction. The recipient
acknowledges that failing to disclose the information required under
45 CFR 620.335 may result in the termination of the award, or
pursuance of other available remedies, including suspension and
debarment. Recipients may access the Excluded Parties List
System at http://epls.arnet.gov.

30. RIGHTS TO INVENTIONS MADE UNDER A CONTRACT OR

AGREEMENT. Contracts or agreements for the performance of
experimental, developmental, or research work shall provide for the
rights of the Federal Government and the recipient in any resulting
invention in accordance with 37 CFR part 401, “Rights to Inventions
Made by Nonprofit Organizations and Small Business Firms Under
Government Grants, Contracts and Cooperative Agreements,” and
any implementing regulations issued by the awarding agency.

31. E-COMMERCE. Arizona State University has adopted a Visa Card

from JP Morgan Chase Bank as its Purchasing Card. The
University is very interested in adopting electronic methods of
ordering from suppliers and in making associated payments with its
Purchasing Card. If your firm has an electronic method of ordering,
please describe it. These electronic methods of ordering could
range from your firm distributing a paper catalog and accepting fax
orders, to your firm has a Web site in which users can configure
and order products. Please also advise if your firm can accept
payment with a Visa Card.

32. PROPOSER TO PACKAGE GOODS. Proposer will package

goods in accordance with good commercial practice. Each
shipping container shall be clearly and permanently marked with
the following: (a) Proposer's name and address; (b) University
department's name, address and purchase order number; (c)
Container number and total number of containers, e.g. box 1 of 4
boxes and (d) the number of the container bearing the packing slip.
Proposer shall bear cost of packaging unless specifically otherwise
provided.

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33. SHIPMENT UNDER RESERVATION PROHIBITED. Proposer is
not authorized to ship the goods under reservation and no tender of
a bill of lading will operate as a tender of the goods.

34. TITLE AND RISK OF LOSS. The title and risk of loss of the goods
shall not pass to the University until the University actually receives
the goods at the point or points of delivery.

35. RIGHT OF INSPECTION. The University shall have the right to

inspect the goods at delivery before accepting them.

36. NO REPLACEMENT OF DEFECTIVE TENDER. Every tender of

goods must fully comply with all provisions of this Agreement as to
time of delivery, quantity, quality, and the like. If a tender is made
which does not fully conform, this shall constitute a breach and
Proposer shall not have the right to substitute a conforming tender.

37. WARRANTIES. In addition to any implied warranties, Proposer

warrants that the goods furnished will conform to the specifications,
drawings, and descriptions listed herein, and to the sample or
samples, if any, furnished by the Proposer. In the event of a
conflict between the specifications, drawings, and descriptions, the
specifications shall govern.

38. COPYRIGHT OWNERSHIP. Proposer’s work under this

agreement is “work for hire” for purposes of the copyright laws of
the United States and any foreign countries, and title to any subject
copyright will vest with the University.

If for any reason the Work would not be considered a work made
for hire under applicable law, Proposer sells, assigns, and transfers
to University all rights and title to the copyright in the Work, related
registrations and copyright applications, and any related renewals
and extensions. This grant of rights and assignment extends to all
works based upon, derived from, or incorporating the Work, to all
income, royalties, damages, claims and payments payable now or
later, to all causes of action, either in law or in equity for past,
present, or future infringement based on the copyrights, and to all
corresponding rights throughout the world.

If the Work is one to which the provisions of 17 U.S.C. 106A apply,

the Author waives and appoints University to assert on the
Proposer’s behalf the Proposer’s moral rights or any equivalent

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 rights regarding the form or extent of any alteration to the Work
(including removal or destruction) or the making of any derivative
works based on the Work, including photographs, drawings or other
visual reproductions or the Work, in any medium, for university
purposes.

Proposer agrees to execute all papers and to perform other proper

acts as University may deem necessary to secure these rights for
University or its designee.

39. INSURANCE REQUIREMENTS. Without limiting any liabilities or

any other obligation of the Proposer, the Proposer shall purchase
and maintain (and cause its subcontractors to purchase and
maintain), in a company or companies lawfully authorized to do
business in the State of Arizona, and rated at least A- VII in the
current A.M. Best’s, the minimum insurance coverage below:

A. Commercial General Liability, with minimum limits of

$1,000,000 per occurrence, and an unimpaired products and
completed operations aggregate limit and general aggregate
minimum limit of $2,000,000. Coverage shall be at least as
broad as the Insurance Service Office, Inc. Form
CG00010196, issued on an Occurrence basis, and endorsed
to add the State of Arizona, its departments, agencies,
boards and commissions as an Additional Insured with
reference to this contract. The policy shall include coverage
for:

Bodily Injury;
Broad Form Property Damage (including completed
operations); (THIS AMOUNT IS PART OF THE $1,000,000)
Independent Contractors Coverage;
Personal Injury;
Blanket Contractual Liability;
Products and Completed Operations, and this coverage shall
extend for one year past acceptance, cancellation or
termination of the services or work defined in this contract;
and
Fire Legal Liability.

B. Business Automobile Liability, with minimum limits of

$1,000,000 per occurrence combined single limit, with
Insurance Service Office Inc. Declarations to include
Symbol One (Any Auto) applicable to claims arising from

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 bodily injury, death or property damage arising out of the
ownership, maintenance or use of any auto. The policy shall
be endorsed to add the State of Arizona, its departments,
agencies, boards and commissions as an Additional Insured
with reference to this contract.

C. Workers Compensation and Employers Liability

insurance as required by the State of Arizona Workers
Compensation statutes, as follows:

Workers Compensation (Coverage A): Statutory Arizona

benefits
Employers Liability (Coverage B): $500,000 each
accident
$500,000each
employee/disease
$1,000,000 policy
limit/disease

Policy shall include endorsement for All State coverage for

state of hire.

D. Professional Liability Insurance with minimum limits of

$1,000,000 (Each Claim and/or Each Wrongful Act and/or
Each Loss) and an unimpaired aggregate limit of $1,000,000
with respect to this contract. Retroactive Liability Date (if
applicable to Claims-Made coverage) shall be the same as
the effective date of this contract. The policy shall cover
professional misconduct or lack of ordinary skill for those
positions defined in the Scope of Work of this contract and,
at the discretion of the State of Arizona, its departments,
agencies, boards and commissions, shall include one of the
following types of Professional Liability policies (if
applicable to the scope of work):

Directors and Officers

Errors and Omissions
Medical Malpractice
Druggists Professional
Architects/Engineers Professional
Lawyers Professional
Teachers Professional
Accountants Professional
Social Workers Professional

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 Other (Specify profession from Scope of Work)

The State of Arizona, its departments, agencies, boards and

commissions shall be named as an Additional Insured as
their interests may appear.

The policy shall contain an Extended Claim Reporting

Provision of not less than one year following termination of
the policy.

E. The State of Arizona, its departments, agencies, boards and

commissions reserves the right to request and receive
certified copies of all policies and endorsements within ten
calendar days of contract signature.

F. Certificates of Insurance acceptable to the State of Arizona,

its departments, agencies, boards and commissions shall be
issued and delivered prior to the commencement of the work
defined in this contract, and shall identify this contract and
include certified copies of endorsements naming the State of
Arizona, its departments, agencies, boards and commissions
as Additional Insured for liability coverages. The certificates,
insurance policies and endorsements required by this
paragraph shall contain a provision that coverages afforded
will not be cancelled until at least thirty (30) days prior written
notice has been given to the State of Arizona, its
departments, agencies, boards and commissions. All
coverages, conditions, limits and endorsements shall remain
in full force and effect as required in this contract.

G. Failure on the part of the Proposer to meet these

requirements shall constitute a material breach of contract,
upon which the State of Arizona, its departments, agencies,
boards and commissions may immediately terminate this
agreement or, at its discretion, procure or renew such
insurance and pay any and all premiums in connection
therewith, and all monies so paid by the State of Arizona, its
departments, agencies, boards and commissions shall be
repaid by the Proposer upon demand, or the State of
Arizona, its departments, agencies, boards and commissions
may offset the cost of the premiums against any monies due
to the Proposer. Costs for coverages broader than those
required or for limits in excess of those required shall not be

202
 charged to the State of Arizona, its departments, agencies,
boards and commissions. Proposer and its insurer(s)
providing the required coverages shall waive their rights of
recovery against the State of Arizona, its departments,
agencies, boards, commissions, employees and officers.

40. SALES AND USE TAX. The Proposer agrees to comply with and
to require all of his subcontractors to comply with all the provisions
of applicable state sales excise tax law and compensation use tax
law and all amendments to same. The Proposer further agrees to
indemnify and save harmless the University, of and from any and
all claims and demands made against it by virtue of the failure of
the Proposer or any subcontractor to comply with the provisions of
any or all said laws and amendments. The University is not exempt
from state sales excise tax and compensation use tax, except for
equipment purchased for research or development under the
provisions of A.R.S. §42-5159 (B) (14). Any equipment ordered as
tax exempt shall be invoiced separately from taxable systems, even
if purchased on the same purchase order from the University.

41. PERSONNEL. Employees of the Proposer assigned to the project

and identified by name in the proposal shall remain dedicated to
this project. Personnel changes shall be permitted only with prior
notification and approval of the University.

42. LIQUIDATED DAMAGES. The University and the Proposer agree

that in the event that the Proposer fails to perform under this
Agreement, the University will be damaged. The extent of the
damage is very difficult to calculate. Therefore, the Proposer
agrees to pay the University liquidated damages if the agreed upon
delivery and installation dates are not met. These liquidated
damages shall be % of the total Agreement price per day after
the agreed on completion date, not to exceed a total of % of the
total Agreement price.

43. INSTALLMENT PAYMENT AGREEMENT. The University is

precluded from entering into an installment payment agreement
unless such agreement can be canceled for non-allocation of funds
at the end of any fiscal year, at no penalty to the University. If
funds are not allocated for this Agreement for periodic payment in
any future annual fiscal period, following the University's formal
request for funds, the University is not obligated to pay the net
remainder of agreed to consecutive periodic payments remaining
unpaid beyond the end of the then current fiscal year. The

203
 University agrees to notify the Proposer of such non-allocation at
the earliest possible time. No penalty shall accrue to the University
in the event this provision shall be exercised. This provision shall
not be construed so as to permit the University to terminate this
Agreement in order to acquire similar equipment from another
party.

44. PRICE ADJUSTMENT. Price changes will normally only be

considered at the end of one Agreement period and the beginning
of another. Price change requests shall be supported by evidence
of increased costs to the Proposer. The University will not approve
price increases that will merely increase the gross profitability of the
Proposer at the expense of the University. Price change requests
shall be a factor in the Agreement extension review process. The
University shall determine whether the requested price increase or
an alternate option is in the best interest of the University.

45. FURNISH AND INSTALL. The items in this proposal will be

provided on a Proposer furnish and install basis. The successful
Proposer shall have complete responsibility for the items or system
until it is in place and working. Any special installation preparation
and requirements must be submitted to the University. All
transportation and coordination arrangements will be the
responsibility of the successful Proposer. Delivery of equipment
will be coordinated so that items will be delivered direct to the
installation site. This will minimize risk of damage and avoid double
handling.

46. THE ARIZONA STATE UNIVERSITY CONFIDENTIAL

FINANCIAL INFORMATION AGREEMENT IS REQUIRED. This
agreement is necessary to comply with the requirements of the
Gramm Leach Bliley Act” dealing with the confidentiality of
customer information and the Safeguarding Rule.

47. The University and Contractor recognize that student

educational records are protected by the federal Family
Educational Rights and Privacy Act (FERPA) (20 U.S.C.
1232g). FERPA permits disclosure of student record information
to “other school officials” who have a legitimate educational interest
in the information. The federal Family Compliance Office has
recognized that institutions can designate other entities, including
vendors and consultants, as “other school officials”. Designated
representatives of Contractor will be designated as “other school
officials” for purposes of this Agreement. No designated

204
representative of the Contractor shall disclose information it
receives under this agreement to any third party, except with the
consent of the student or as required by law. Any disclosures made
by the Contractor should comply with the University’s definition of
legitimate educational purpose. If any designated representative
discloses or misuses any educational record, the University will
take appropriate action against the designated representative that
is similar to action ASU would take against one of its employees
who disclosed or misused the educational records of its students.

205
SECTION XII – MANDATORY CERTIFICATIONS & SUBSTITUTE W-9
CONFLICT OF INTEREST CERTIFICATION

_____________________
(date)

Purchasing and Business Services

Arizona State University
PO Box 875212
Tempe, AZ 85287-5212

The undersigned certifies that to the best of his/her knowledge: (check

only one)
( ) There is no officer or employee of Arizona State University
who has, or whose relative has, a substantial interest in any
contract resulting from this request.
( ) The names of any and all public officers or employees of
Arizona State University who have, or whose relative has, a
substantial interest in any contract resulting from this request,
and the nature of the substantial interest, are included below
or as an attachment to this certification.

________________________________
(firm)

________________________________
(address)

_______________________ ________________________________
(signature required) (Phone)

_______________________ ________________________________
(print name) (fax)

_____________________ ________________________________
(print title) (Federal Taxpayer ID Number)

(Purchasing 01-31-2007. Previous editions are obsolete and cannot be

used.)

206
 FEDERAL DEBARRED LIST CERTIFICATION

Certification Regarding Debarment, Suspension, Proposed

Debarment, and Other Responsibility Matters (Dec 2001)

_____________________
(date)

Purchasing and Business Services

Arizona State University
PO Box 875212
Tempe, AZ 85287-5212

In accordance with the Federal Acquisition Regulation, 52.209-5:

(a) (1) The Offeror certifies, to the best of its knowledge and belief, that—
(i) The Offeror and/or any of its Principals—
(A) (check one) Are ( ) or are not ( ) presently debarred,
suspended, proposed for debarment, or declared ineligible
for the award of contracts by any Federal agency; (The
debarred list (List of Parties Excluded from Federal
Procurement and Nonprocurement Programs) is at
http://epls.arnet.gov on the Web.)
(B) (check one) Have ( ) or have not ( ), within a three-
year period preceding this offer, been convicted of or had a
civil judgment rendered against them for: commission of
fraud or a criminal offense in connection with obtaining,
attempting to obtain, or performing a public (Federal, state,
or local) contract or subcontract; violation of Federal or state
antitrust statutes relating to the submission of offers; or
commission of embezzlement, theft, forgery, bribery,
falsification or destruction of records, making false
statements, tax evasion, or receiving stolen property; and
(C) (check one) Are ( ) or are not ( ) presently indicted
for, or otherwise criminally or civilly charged by a
governmental entity with, commission of any of the offenses
enumerated in paragraph (a)(1)(i)(B) of this provision.
(ii) The Offeror (check one) has ( ) or has not ( ), within a three-
year period preceding this offer, had one or more contracts
terminated for default by any Federal agency.
(2) “Principals,” for the purposes of this certification, means officers;
directors; owners; partners; and, persons having primary management
or supervisory responsibilities within a business entity (e.g., general

207
 manager; plant manager; head of a subsidiary, division, or business
segment, and similar positions).
This Certification Concerns a Matter Within the Jurisdiction of an Agency
of the United States and the Making of a False, Fictitious, or Fraudulent
Certification May Render the Maker Subject to Prosecution Under
Section 1001, Title 18, United States Code.
(b) The Offeror shall provide immediate written notice to the
Contracting Officer if, at any time prior to contract award, the Offeror
learns that its certification was erroneous when submitted or has
become erroneous by reason of changed circumstances.
(c) A certification that any of the items in paragraph (a) of this provision
exists will not necessarily result in withholding of an award under this
solicitation. However, the certification will be considered in connection
with a determination of the Offeror’s responsibility. Failure of the
Offeror to furnish a certification or provide such additional information
as requested by the Contracting Officer may render the Offeror
nonresponsible.
(d) Nothing contained in the foregoing shall be construed to require
establishment of a system of records in order to render, in good faith,
the certification required by paragraph (a) of this provision. The
knowledge and information of an Offeror is not required to exceed that
which is normally possessed by a prudent person in the ordinary
course of business dealings.
(e) The certification in paragraph (a) of this provision is a material
representation of fact upon which reliance was placed when making
award. If it is later determined that the Offeror knowingly rendered an
erroneous certification, in addition to other remedies available to the
Government, the Contracting Officer may terminate the contract
resulting from this solicitation for default.

__________________________
(firm)

________________________________
(address)

____________________ _______________________
(signature required) (Phone)

_________________________ ________________________
(print name) (fax)

______________________ _________________________
(print title) (Federal Taxpayer ID Number)

208
 (Purchasing 01-31-2007)

209
 ANTI-LOBBYING CERTIFICATION

Certification and Disclosure Regarding Payments to Influence

Certain Federal Transactions (Sept 2005)

_____________________
(date)

Purchasing and Business Services

Arizona State University
PO Box 875212
Tempe, AZ 85287-5212

In accordance with the Federal Acquisition Regulation, 52.203-11:

(a) The definitions and prohibitions contained in the clause, at

FAR 52.203-12, Limitation on Payments to Influence Certain Federal
Transactions, included in this solicitation, are hereby incorporated by
reference in paragraph (b) of this certification.

(b) The offeror, by signing its offer, hereby certifies to the best of his
or her knowledge and belief that on or after December 23, 1989—

(1) No Federal appropriated funds have been paid or will be

paid to any person for influencing or attempting to influence an officer or
employee of any agency, a Member of Congress, an officer or employee
of Congress, or an employee of a Member of Congress on his or her
behalf in connection with the awarding of this contract;

(2) If any funds other than Federal appropriated funds

(including profit or fee received under a covered Federal transaction) have
been paid, or will be paid, to any person for influencing or attempting to
influence an officer or employee of any agency, a Member of Congress,
an officer or employee of Congress, or an employee of a Member of
Congress on his or her behalf in connection with this solicitation, the
offeror shall complete and submit, with its offer, OMB standard form LLL,
Disclosure of Lobbying Activities, to the Contracting Officer; and

(3) He or she will include the language of this certification in

all subcontract awards at any tier and require that all recipients of
subcontract awards in excess of $100,000 shall certify and disclose
accordingly.

210
 (c) Submission of this certification and disclosure is a prerequisite
for making or entering into this contract imposed by section 1352, Title 31,
United States Code. Any person who makes an expenditure prohibited
under this provision or who fails to file or amend the disclosure form to be
filed or amended by this provision, shall be subject to a civil penalty of not
less than $10,000, and not more than $100,000, for each such failure.

(Signature page follows)

______________________________________
(firm)

______________________________________
(address)

________________________ _______________________
(signature required) (Phone)

________________________ ________________________
(print name) (fax)

_________________________ ________________________
(print title) (Federal Taxpayer ID Number)

(Purchasing 01-31-2007)

211
 SUDAN OR IRAN BUSINESS OPERATIONS CERTIFICATION

_____________________
(date)

Purchasing and Business Services

Arizona State University
PO Box 875212
Tempe, AZ 85287-5212

The undersigned certifies that pursuant to Arizona Revised Statutes § 35-

391 and 35-393, the below entity does not have a scrutinized business
operation in either Sudan or Iran.

_____________________________
(firm)

________________________________
(address)

_________________________ _________________________
(signature required) (Phone)

_________________________ _________________________
(print name) (fax)

_________________________ _________________________
(print title) (Federal Taxpayer ID
Number)

(Purchasing 02-18-2009)

212
 LEGAL WORKER CERTIFICATION
_____________________
(date)

Purchasing and Business Services

Arizona State University
PO Box 875212
Tempe, AZ 85287-5212

As required by Arizona Revised Statutes §41-4401 the University is

prohibited after September 30, 2008 from awarding a contract to any
contractor who fails, or whose subcontractors fail, to comply with Arizona
Revised Statutes § 23-214-A. The undersigned entity warrants that it
complies fully with all federal immigration laws and regulations that relate
to its employees, that it shall verify, through the employment verification
pilot program as jointly administered by the U.S. Department of Homeland
Security and the Social Security Administration or any of its successor
programs, the employment eligibility of each employee hired after
December 31, 2007, and that it shall require its subcontractors and sub-
subcontractors to provide the same warranties to the below entity.
The undersigned acknowledges that a breach of this warranty by the
below entity or by any subcontractor or sub-subcontractor under any
Contract resulting from this solicitation shall be deemed a material breach
of the Contract, and is grounds for penalties, including termination of the
Contract, by the University. The University retains the right to inspect the
records of the below entity, subcontractor and sub-subcontractor
employee who performs work under the Contract, and to conduct random
verification of the employment records of the below entity and any
subcontractor and sub-subcontractor who works on the Contract, to
ensure that the below entity and each subcontractor and sub-
subcontractor is complying with the warranties set forth above.

_________________________ _________________________
(firm) (address)

_________________________ _________________________
(signature required) (Phone)

_________________________ _________________________
(print name) (fax)

_________________________ __________________________
(print title) (Federal Taxpayer ID Number)

213
 (Purchasing 09-23-2008)

214
 SUPPLIER SUSTAINABILITY QUESTIONNAIRE

Company Name: Date:

The Supplier Sustainability Questionnaire must be completed and

returned with your Bid/Proposal. This questionnaire is applicable to firms
that provide only services as well as those that provide goods.

1. What policies are in place to monitor and manage your supply chain
regarding environmental issues? Please check the items that apply.
We apply environmental criteria when making purchasing decisions.
We purchase “green” (recyclable, reusable, non-toxic, bio-degradable,
and made from 100% post-consumer recycled materials) supplies,
products and materials.
We specify sustainable products and or locally manufactured products
We specify products using Electronic Products Environmental
Assessment Tool (EPEAT) standards
We partner with sustainable suppliers or utilize suppliers who share in
the sustainability commitment
Our Director of Sustainability is researching industry best procurement
practices
Other – describe other ways your company monitors and manages
your supply chain regarding environmental issues:
_______________________________________________________
_______________________________________________________
_______________________________________________________
_______________________________________________________

2. What type of sustainable packaging/shipping materials do you use?

Please check the items that apply.
Our packaging/shipping materials are recyclable
Our packaging/shipping materials are reusable
Our packaging/shipping materials are bio-degradable
Our packaging/shipping materials are made from 100% post-
consumer recycled materials
Other – describe other types of sustainable packaging/shipping
materials you use:
________________________________________________________
________________________________________________________
________________________________________________________
________________________________________________________

215
3. Does your company have a Green Transportation Plan for your
operation? Please check the items that apply.
We encourage carpooling, public transportation, and using other
alternative modes of transportation
We subsidize public transportation for employees
We are developing a Green Transportation Plan
We have an established Green Transportation Plan (describe below)
We offer flexible hours, telecommuting or a compressed work week
We utilize teleconference, video conference, WebEx or GoTo
Meetings
We purchase carbon offsets
We own electric, hybrid, or E-85 fueled vehicles
We rent hybrid vehicles
Other – describe your company’s Green Transportation Plan for your
operation:
________________________________________________________
________________________________________________________
________________________________________________________
________________________________________________________

4. What does your company do to minimize the environmental costs

associated with shipping? Please check the items that apply.
We are evaluating what the company can do to minimize the
environmental costs associated with shipping
We combine deliveries with customer visits
We consolidate deliveries
We use bike couriers for local delivery
We utilize electronic communications and electronic transfer of
documents. E-mail, fax and Portable Document Format (PDF)
We use eco-friendly courier’s packaging/shipping materials that
include post-consumer waste recycled materials and are recyclable
Our packaging and shipping materials are reused until they eventually
get recycled
We have established a sustainability plan that minimizes the need for
shipping (describe below)
We update mailing lists to minimize unwanted mailings
We specify products that can be purchased within a 500 mile radius of
the delivery location
Other – describe what your company does to minimize the
environmental costs associated with shipping
________________________________________________________
________________________________________________________
________________________________________________________
________________________________________________________

216
5. Does your company have an environmental policy statement? Please
check the items that apply.
We are developing an environmental policy statement
Our environmental policy statement consists of a commitment to
promote environmental stewardship
Our environmental policy statement describes our company’s
Sustainability Initiative
We have formed an oversight committee to ensure the success of our
environmental policy
Our environmental policy statement describes how our company
explores opportunities to work with communities, governments and
non-governmental and professional organizations to help articulate,
teach and advance the principles of sustainability
Other - Provide (or supply a link) your company’s environmental policy
statement
________________________________________________________
________________________________________________________
________________________________________________________
________________________________________________________

6. Has your company ever been cited for non-compliance of an

environmental or safety issue? Please check the item that applies.
No, my company HAS NOT been cited for non-compliance of an
environmental or safety issue.
Yes, my company HAS been cited for non-compliance of an
environmental or safety issue.
State the reason, date and outcome of the citation
________________________________________________________
________________________________________________________
________________________________________________________
________________________________________________________

7. What programs do you have in place, or planned for promoting

resource efficiency? (i.e. an environmental or waste audit)? Please check
the items that apply.
We recycle consumables, reduce waste and practice energy reduction
when possible
We are developing a recycling program
We utilize a formal energy management system
We are a member of various environmental organizations
We have formed a Sustainability Committee to identify sustainable
solutions for our company
We have a company-wide Recycling Program
Our Director of Sustainability initiates and supports sustainability

217
 efforts
We have performed an environmental or waste audit
We are recognized by peers and environmental organizations for
providing leadership in sustainability
We are a carbon-neutral company
Other - what other programs do you have in place, or planned for
promoting resource efficiency
________________________________________________________
________________________________________________________
________________________________________________________
________________________________________________________

8. Does your company have web-based materials available documenting

your “Green” initiatives? Please check the items that apply.
We are developing web-based documentation of “Green” initiatives
(provide link)
Our website includes “Green” reference information (provide link)
Our website contains an environmental policy statement (provide link)
Our website includes materials that document company’s “Green”
initiatives (provide link)
Our website contains our company’s Sustainability Report (provide
link)
Other – Does your company have other web-based materials
available documenting your “Green” initiatives? (provide link)
________________________________________________________
________________________________________________________
________________________________________________________
________________________________________________________

9. If you are providing a product, does the manufacturer of the product that
you are bidding/proposing have an environmental policy statement?
Please check the item that applies.
No, the manufacturer of the product that I am bidding/proposing
DOES NOT have an environmental policy statement
Yes, the manufacturer of the product that I am bidding/proposing HAS
an environmental policy statement
Provide Environmental Policy Statement
________________________________________________________
________________________________________________________
________________________________________________________
________________________________________________________

218
10. If you are providing a product, has the manufacturer of the product that
you are bidding/proposing ever been cited for non-compliance of an
environmental or safety issue? Please check the item that applies.
No, the manufacturer of the product that I am bidding/proposing HAS
NOT been cited for non-compliance of an environmental or safety
issue
Yes, the manufacturer of the product that I am bidding/proposing HAS
been cited for non-compliance of an environmental or safety issue
Provide reason, date and outcome of the citation
________________________________________________________
________________________________________________________
________________________________________________________
________________________________________________________

11. Has an environmental life-cycle analysis of the product that you are
bidding/proposing been conducted by a certified testing organization, such
as Green Seal? Please check the item that applies.
No, an environmental life-cycle analysis of the product that I am
bidding/proposing HAS NOT been conducted by a certified testing
organization, such as Green Seal
Yes, an environmental life-cycle analysis of the product that I am
bidding/proposing HAS been conducted by a certified testing
organization, such as Green Seal.
Provide certification
________________________________________________________
________________________________________________________
________________________________________________________
________________________________________________________

12. If selected pursuant to this solicitation, what are your plans if there is a
major and/or catastrophic pandemic influenza outbreak for continuing your
operations and services to ASU?
________________________________________________________
________________________________________________________
________________________________________________________
________________________________________________________

219
RETUR DO NOT
N TO SEND TO
ASU IRS
ARIZONA STATE UNIVERSITY
SUBSTITUTE W-9 & VENDOR
AUTHORIZATION FORM

Foreign persons who are non-residents for US Tax purposes do not

complete the ASU Substitute W-9 form. Instead, complete IRS Form
W-8 BEN available at http://www.irs.gov/pub/irs-pdf/fw8ben.pdf
Employer ID Number
► Taxpayer Identification (EIN)
Number (TIN) Social Security
Number (SSN)
► LEGAL
NAME:
(must match
TIN above)
Are you doing business in Arizona for purposes of sales/use tax collection
and remittance? Yes No

If “Yes” please provide Arizona License # and

sales/use tax rate charged % DUNS#

►LEGAL
MAILING (Where tax information and general correspondence is to
ADDRESS: be sent)

DBA/Branch/
Location:

ADDRESS:

ADDRESS
LINE 2:

CI
TY S
: T: ZIP:

220
► REMIT TO
Same as Legal Mailing Address
ADDRESS:
DBA/Branch/
Location:

ADDRESS:

ADDRESS
LINE 2:

CITY: ST: ZIP:

► ENTITY TYPE
Sole
Individual proprietor Corporation Corporation Partnership,
(not a (individually (NOT (providing LLP or
business) owned providing health care, partnership
business) or health care, medical or organized as
sole medical or legal LLC or PLLC
proprietor legal services)
organized as services)
LLC or PLLC
The US A state, Tax- An State of
or any of its a exempt international Arizona
political possession organizations organization Employee
subdivisions of the US, or under IRC or any of its
or any of their §501 agencies or
instrumentalit political instrumentali
ies subdivisions ties
or
instrumentali
ties)
► CERTIFICATION
Under penalties of perjury, I certify that:
1. The number shown on this form is my correct taxpayer identification
number (or I am waiting for a number to be issued to me),
2. I am not subject to backup withholding because: (a) I am exempt
from backup withholding, or (b) I have not been notified by the
Internal Revenue Service (IRS) that I am subject to backup
withholding as a result of a failure to report all interest or dividends,
or (c) the IRS has notified me I am no longer subject to backup
withholding,
3. I am a U.S. person (including a resident alien).
Certification instructions: You must cross out item 2 above if you have
221
been notified by the IRS that you are currently subject to backup
withholding because you have failed to report all interest and dividends on
your tax return.
The Internal Revenue Service does not require your consent to any
provision of this document other than the certification required to
avoid backup withholding

Signature of U.S. Individual Date:

NOTE: IF BOTH PAGES OF THIS FORM ARE NOT COMPLETED THE
FORM WILL BE RETURNED TO YOU. Arizona State University (ASU)
is fulfilling a mandate associated with state agencies increasing
procurements from Arizona Small and Diverse Businesses.

222
RETUR ARIZONA STATE UNIVERSITY DO NOT
N TO SUBSTITUTE W-9 & VENDOR AUTHORIZATION SEND TO
ASU FORM IRS

► Legal Name:
TIN:

SECTION 1 - FEDERAL INFORMATION - REQUIRED

What is the Federal classification type of your business? - See

definitions on link below.
(S.B.A. Small Business definition FAR 19.001 and size standards FAR
19.102)
http://www.sba.gov/size

LARGE Business? YES NO

SMALL Business? YES NO

Please check all that apply to your business for Federal Supplier
Type:

Service Disabled Small Disadvantaged Women Owned (WO)

Veteran Owned (VD) (SD)

Veteran Owned (VO) Minority Institution (MI) HUB Zone (HZ)

SECTION 2 - STATE OF ARIZONA SMALL BUSINESS INFORMATION

- REQUIRED

Are you self-certified according to this State

of Arizona definition?
YES NO
“100 full-time employees or less OR $4 million in
volume or less in the last fiscal year”

Per FAR 52.219-1 and under 15 U.S.C. 645(d), any person who
misrepresents a firm’s status as a small, HUB Zone small, small
disadvantaged, or women-owned small business concern in order to
obtain a contract to be awarded under the preference programs
established pursuant to section 8(a), 8(d), 9, or 15 of the Small Business
Act or any other provision of Federal law that specifically references
section 8(d) for a definition of program eligibility, shall be punished by
imposition of fine, imprisonment, or both; be subject to administrative
223
remedies, including suspension and debarment; and be ineligible for
participation in programs conducted under the authority of the Act.

Print
Name:
Signature:

PHONE: FAX:

VENDOR –
LIST
PRODUCT or
SERVICE
PROVIDED

Buyer: Phone: Fax:

IF BUYER
NAME IS
LISTED
PLEASE
RETURN TO
BUYER

NOTE: IF BOTH PAGES OF THIS FORM ARE NOT COMPLETED THE

FORM WILL BE RETURNED TO YOU. Arizona State University (ASU)
is fulfilling a mandate associated with state agencies increasing
procurements from Arizona Small and Diverse Businesses.

224
ATTACHMENT 1 – RISK ASSESSMENT AND VALUE ADDED PLAN

Introduction
The purpose of the Risk Assessment and Value Added (RAVA) plan is to
identify if a vendor can quickly calculate the risks on a future project in
terms of money, time, and client expectation (of quality and performance).
The RAVA plan is used to:
1. Assist the client in prioritizing firms based on their ability to understand
the risk of a project.
2. Provide high performing vendors the opportunity to differentiate
themselves from their competitors due to their experience and
expertise.
3. Minimize the effort of experienced companies who are competing for
the project.
4. Provide a mechanism for the high performers to regulate the low
performers by ensuring that if they are not selected, the selected
company will have to minimize all risks that they have identified.
Vendors should keep in mind that the RAVA plan is only one step in the
selection process. If all the RAVA plans are the same, the RAVA plan will
have little impact in the selection (other factors, such as past performance
and interview will dictate the selection).

RAVA Plan Format

The format for the RAVA plan is attached. The RAVA Plan should clearly
address the following items in a non-technical manner:
1. List and prioritize major risk items that are unique to this project. This
includes areas that may cause the project to not be completed on time,
not finished within cost expectations, generate any changes, or may be
a source of dissatisfaction for the owner.
2. Explain how the vendor will avoid / minimize the risk. If the vendor has
a unique method to minimize the risk, they should explain it in non-
technical terms.
3. Propose any options that could increase the value (expectation or
quality) of their work. List any value or differential they are bringing to
the project.
In order to minimize any bias by the evaluation committee, the RAVA
Plans must not contain ANY names (such as vendor, sponsor, or
personnel names, project names, product names, or company letterhead).
The RAVA Plans should not contain any marketing information.
The client’s goal is to make the selection process as efficient as possible.
Efficiency is to minimize the effort of all participants, especially those who
will not get the project. Therefore, the RAVA plan should be a brief and
concise overview of the major risks on the future project. The RAVA plan
must not exceed 3 pages.
225
Risk Assessment and Value Added Plan Format (2 Page Maximum)

Please prioritize the risks (list the greatest risks first). You may add/delete
the risk tables below as necessary. (Font to be no smaller than size 10)

Risk 1:
Solution:

Risk 2:
Solution:

Risk 3:
Solution:

Risk 4:
Solution:

Vendors should identify any value added options or differentials that they
are proposing, and include a short description of how it adds value to the
project/the Universities. Identify if the items will increase or decrease
schedule, financial consideration, or expectations. You may add/delete
the value tables below as necessary.

Item 1:
Impact:

Item 2:
Impact:

Item 3:
Impact:

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ATTACHMENT 2 – PAST PERFORMANCE INFORMATION - VENDOR

Guide to Collecting, Submitting, and Updating

Past Performance Information

Section 1.0 - Background

Past Performance Information (PPI) is used to assist users in

identifying the past performance capability of a vendor and key
components of their team. This is achieved by surveying clients on
past projects that have been completed. In this process, the vendor
is responsible for assuring that they received high performing survey
responses on all of their critical team components. One of the
greatest benefits of this PPI process is that once a vendor or
individual has been through the process, they do not have to re-
submit this information on future best-value projects (minimizing the
efforts of all parties). All of the information is stored in a database
and re-used on all future best-value projects. Please note: Although
having documented high PPI scores is important, it is generally only
one of the components being used and analyzed by the user.

Section 2.0 - Overview of the PPI Process

There are four different options on how vendors/individuals can

proceed with the PPI Process. All new vendors/individuals must follow
the PPI process outlined in this document (Option 1). All existing
vendors/individuals that already have PPI in the system have three
options that they may proceed with (Options 2-4).

PPI Option 1: The firm/individual does not have an existing PPI

database on record. They must follow the instructions
outlined in this document.
PPI Option 2: The firm/individual has an existing PPI score and wishes
to use the database without any modifications. No further
action is required.
PPI Option 3: The firm/individual has an existing PPI score and would
like to submit additional surveys. No existing surveys can
be deleted from the database. The firm/individual must
follow the PPI process outlined in this document.
PPI Option 4: The firm/individual can permanently delete their existing
database and create a new database. The firm/individual

227
 must follow the PPI process outlined in this document.

The PPI process consists of five major tasks, which are outlined in the
Figure 1 (the procedures apply to individuals as well as companies):

1. The vendor prepares a list of past clients that they have done work
for (called a “Reference List”)
2. The vendor sends each past client on the Reference List a survey
questionnaire.
3. The past clients complete the survey and send the survey back to
the vendor.
4. The vendor will compile all of the surveys and submit the surveys
as part of their proposal package.
5. The PBSRG averages all of the returned surveys to compile the
vendor’s average PPI score.

Prepare & Email

Vendor or Reference List
Individual Prepare & Submit
Surveys

Faxes
back to Proposal
Vendor 1. Prepare Survey Form
2. Fax Surveys to past clients
3. Ensure that surveys are returned

PBSRG
Compiles
Past Information
Customer

Figure 1: Survey Process

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Section 3.0 – Creating a Reference List

3.1. All individuals identified in Section VII must create a list of past
users that will evaluate their past performance. This will be referred
to as a “Reference List”.

3.2. The “Reference List” must be submitted on a MS Excel

spreadsheet. A template can be downloaded at:
www.pbsrg.com/pips/ppi-database-az/

3.3. Each critical team member will be treated as a separate entity.

Therefore, each critical team member must submit separate
“Reference Lists” (they cannot be combined into one file).

3.4. The “Reference List” must contain two sheets: “Past Project List”
and “Vendor or Individual Profile”.

3.5. The “Vendor or Individual Profile” sheet requests information about

the critical team member (firm or individual) being surveyed. If the
“Reference List” is being submitted for a company, then you will fill
in the vendor information. If the “Reference List” is being submitted
for an individual, then you will fill in the individual information. Do
not fill in both. See Figure 2 for an example. “Point of Contact” is
the individual that can answer questions about the contents of the
“Reference List”.

Figure 2: The “Vendor or Individual Profile” Sheet Contains

Basic Information on the Entity Being Surveyed

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3.6. The “Vendor or Individual Profile” also requires you to select a PPI
Option.

PPI Option 1: The firm/individual does not have an existing PPI

database on record and is submitting their first
database.
PPI Option 2: The firm/individual has an existing PPI score and
wishes to use the database without any modifications.
PPI Option 3: The firm/individual has an existing PPI score and
would like to submit additional surveys. No existing
surveys can be deleted from the database.
PPI Option 4: The firm/individual has an existing PPI score but is
requesting to permanently delete their database. A
new database will be created based on a new
Reference List.

3.7. The “Past Project Info” sheet (Figure 3) requests information on

each past project that will be surveyed. This includes the following
(all data fields are required and must be accurate):

CODE - A unique (different) number assigned to each project

FIRST NAME - First name of the person responding to the
questionnaire
LAST NAME - Last name of the person responding to the
questionnaire
PHONE NUMBER - Current phone number for the reference
(including area code)
FAX NUMBER - Current fax number for the reference (including
area code)
USER NAME - Name of the company or institution for which the
work was performed
PROJECT NAME - Name of the project (i.e. Bird High School A-
Wing)
DATE COMPLETED - Date when construction was 100%
completed. Construction must also be 100% completed for any
design projects that are submitted.
COST OF PROJECT - Awarded cost of project. For design
firms/individuals the cost should be the estimated cost of
construction.

230
 Figure 3: The “Past Project Info” Sheet Contains
Information on the Past Projects Being Surveyed

3.8. The “Reference List” should contain the vendors/individuals “best”

past projects. Do not submit references for past clients that may
give you low ratings. It is the vendor’s or individual’s
responsibility to ensure that their past references are highly
satisfied and will provide very high ratings. Important note: Once
a survey is returned, it will not be deleted*, so it is the vendor’s or
individual’s responsibility to ensure that they do not receive low
ratings. (*See Section 2.0 of this attachment on how to delete an
entire database)

3.9. The past projects do not have to be similar to any type of project.
You should submit the vendors/individuals best past projects.

3.10. The “Reference List” must contain past projects that are 100%
complete. Projects that are substantially complete or on-going
may not be submitted (no credit will be given for projects that are
not complete). For design firms and individuals, all projects on
the reference list must also be 100% constructed. If a designed
project has not been constructed, it may NOT be listed in the
Reference List.

3.11. The maximum number of past projects that will be given credit for,
is 10 (ten) for the firm (Dealer/Manufacturer) and 5 (five) for each
individual. The minimum number of past projects that will be
given credit for is 1 (one) for each component.

3.12. Credit will be given to vendors/individuals with more high

performing surveys (Figure 4).

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 Firm Firm
No Criteria
A B
Average customer satisfaction ratings
1 9.5 9.5
(1-10)
2 Number of different jobs surveyed 25 1
Number of different customers
3 25 1
surveyed
Figure 4: Number of Returned Surveys May Impact
Competitiveness

3.13. Vendors/Individuals may submit as many references as they want

to increase their (1-10) ratings. If the Vendor/Individual exceeds
the credit limit on the “Number of different jobs” and “Number of
different customers”, those numbers will be capped (as described
in Section 7.3. of this attachment).

3.14. The “Reference List” must contain different projects. You cannot
have different people evaluating the same job. However, you are
allowed to have one person evaluate several different jobs. All
different jobs require a separate code and separate survey, even
if evaluated by the same person.

3.15. The past client/owner must evaluate and complete the survey.
You cannot have other vendors (contractors, subcontractors,
designers) evaluate your performance.

3.16. All critical team components must submit separate “Reference

Lists”. The file should be saved as the Vendor or Individual Name
followed by “Ref List” (see Figure 5).

Figure 5: Save Your Reference List So It Can Be Easily Identified

3.17. The vendor/individual is responsible for verifying that their

information is accurate prior to submission.

3.18. The PPI process is a one-time function. The firm/individual does

not have to repeat this process on future projects (once they have
established their PPI scores). The firm/individual will be allowed
232
 to add more projects to their “Reference List” at any time (as long
as they submit an updated “Reference List”).

Section 4.0 – Creating and Sending Out Surveys

4.1. Each critical team member is responsible for creating and sending
out a survey questionnaire to each of their past clients. The survey
questionnaire can be found in Attachment 5.

4.2. The vendor/individual should input the required information on the

survey questionnaire (survey code, past clients contact information,
project information, and name of the firm and/or individual being
surveyed) prior to sending to past clients.

4.3. All the information on the survey form must match the information in
the “Reference List” (see Figure 6).

Figure 6: Information Survey Form Must Match Your Reference List

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4.4. All critical individuals that participated on the project should be listed
on all of the vendor’s surveys (Figure 7). This eliminates the need to
re-survey the client in the future (based on the individuals).

Figure 7: Vendors Should List All Critical Individuals on Survey

4.5. The critical individuals that should be listed on every survey are
identified in Section 3.2 of this attachment.

4.6. You may only list one individual per position on each survey (i.e. If
Joe Smith was a PM on the project, you cannot list another individual
as a PM on that same project.).

4.7. The Vendor should also modify the “return information” at the bottom
of the survey with a contact person and an accurate fax number
(Figure 8). Remember, the survey will be sent from your past client
to you (so you must enter a valid fax number).

Figure 8: Vendors Should Provide an Accurate Fax Number

4.8. Once you have entered all of the required information, you must fax
the survey to your past client. The vendor/individual should call to
confirm that the survey was received, and that the past client will
return the survey to the vendor prior to the due date. (Note: The
previous PPI process required the surveys to be sent directly to the
PIPS User from the past client. In the current process, the surveys
are returned directly to the vendor or individual).

4.9. All returned surveys MUST be evaluated and signed by the past
client. If a survey is not signed, it will NOT be accepted (Figure 9).

234
 Figure 9: Past Clients Must Sign the Survey Before Returning

4.10.All individuals listed on the survey will receive credit for the survey,
provided that they have submitted a “Reference List” that contains
the project as a reference.

4.11.PBSRG may contact the reference for additional information or to

clarify survey data or ratings. If the reference cannot be contacted,
there will be no credit given for that reference/survey.

Section 5.0 – Submitting PPI as part of your Proposal

5.1. The vendor/individual is required to submit a PPI Package as part

of their proposal. The PPI Package must include the following:

a. Hardcopy of all returned surveys

b. Hardcopy of the reference list
c. CD with an electronic copy of the Reference List (in MS Excel
.xls format)

5.2. Please make a photocopy of all surveys prior to submitting the

package. In the event that surveys are lost in transit, they can
easily be recopied and resubmitted. This will prevent you from
having to resurvey your past clients.

5.3. You may not scan/email the surveys. All surveys must be in
hardcopy and submitted in a package.

5.4. If you are submitting PPI for different components (i.e. several
different individuals), each component must be separate in your
proposal. Do not combine surveys and reference lists into the
same section for all of the areas. If you have received one returned
survey and wish to use the survey for both the firm and individual,
please make a photocopy and place the surveys in the appropriate
PPI sections.

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Section 6.0 – Calculating Your PPI Score

6.1. Once the Universities receive the PPI Package, the survey scores will
be entered into a spreadsheet.

6.2. Only surveys that are returned in the proper format will be entered.

6.3. PBSRG will then average all of the survey responses, to obtain an
average rating for each criterion. PBSRG will also calculate the
number of different jobs and different customers that returned a
survey (Figure 10).

Figure 10: Calculating the Vendors/Individuals PPI Scores

6.4. Important note: Once a survey is returned to the Universities, it will

not be deleted* so it is the vendors/individuals responsibility to
ensure that they do not receive low ratings. (*See Section 2.0 of
this attachment on how to delete an entire database)

6.5. PBSRG may contact the reference for additional information or to

clarify survey data. If the reference cannot be contacted, there will
be no credit given for that reference/survey.

6.6. PBSRG will not include/count surveys if:

a. The past client states that the project is not complete
b. The raters name, client’s name, or project name do not match
the name in the “Reference List” (excluding minor
discrepancies)
c. The person who rated the survey is not the same person listed
in the “Reference List”

236
d. The past client does not sign the survey as required.

237
Section 7.0 – How to Modify or Update Your Existing PPI Database

7.1. Vendors/Individuals that have an existing PPI Database may

submit more references at any time to increase their PPI score.
The vendor/individual must follow the PPI Process outlined in this
document.

7.2. The vendor/individual may update their PPI scores by submitting a

new “Reference List” and by submitting additional surveys. The
new Reference List should contain all of the previous projects, and
include a list of additional (or new) projects that are to be added to
the database.

7.3. If the Vendor/Individual exceeds the maximum credit limit on the

“Number of different jobs” and “Number of different customers”,
those numbers will be manually capped as shown in Figure 11.
The 1-10 will still be an average of all returned surveys (no surveys
are deleted).

Firm J Firm J
No Criteria
(Actual) (Credited)
Average customer satisfaction ratings (1-
1 9.27 9.27
10)
2 Number of different jobs surveyed 42 10
3 Number of different customers surveyed 31 10
Figure 11: Surveys Will Be Capped if They Exceed the Maximum
Credit Limit

7.4. The “Reference List” should contain the vendors/individuals “best”

past projects. Do not submit references for past clients that give
you low ratings. It is the vendor’s or individual’s responsibility to
ensure that their past references are highly satisfied and will
provide very high ratings. Important note: Once a survey is
returned to PBSRG, it will not be deleted, so it is the vendor’s or
individual’s responsibility to ensure that they do not receive low
ratings. The vendor/individual does have the opportunity to
completely delete all PPI surveys. If the vendor/individual elects to
do this, all previous surveys and Reference Lists will be
permanently deleted. The vendor/individual will be responsible for
re-surveying any previous clients that may have returned a survey
in the past.

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Section 8.0 – ADDITIONAL INFORMATION

8.1. The vendor/individual is responsible for contacting their past clients

and informing them about the importance of the survey and any
applicable deadline for submission. PBSRG may contact the
references for additional information. If the reference cannot be
contacted, there will be no credit given for that reference.

8.2. The following is a list of documents that can be found on the

website that pertain to PPI:

No Document and Website Address

1 Survey Form (Furniture)
http://pbsrg.com/pips/ppi-database-az/6.doc
2 List of Companies and Individuals with PPI Scores
http://pbsrg.com/pips/ppi-database-az/4.xls
3 PPI Code Request
http://www.pbsrg.com/pips/code_req_az.htm
4 PPI Scores
http://pbsrg.com/pips/ppi-database-az/5.xls
5 PPI Database Request ($100 fee)
http://www.pbsrg.com/pips/pline_req_az.htm

8.3. For additional information, please visit the website

(www.pbsrg.com), or contact Jake Smithwick by email:
Jake.Smithwick@asu.edu

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9.0 – Frequently Asked Questions

1. How do I know if someone returned a survey?

Answer: Firms and Individuals are now responsible for their own
collection of surveys; therefore it is their responsibility to keep track
of the surveys that are returned to them. If a firm or individual
missed the PPI seminar October 21st, 2008 at ASU or missed the
window for which no administrative fee was charged for copies of
PPI databases, the following link can be used to request copies of
performance lines on file prior to October 21st, 2008
http://www.pbsrg.com/pips/pline_req_az.htm

2. Why is a survey not counted in the PPI Database?

Answer: A retuned survey will not be counted if it does not follow
the directions in this document. Most common reasons for not
counting a survey include: the project is not complete, the survey
information does not match the information in the reference list, the
survey was turned in late.

3. We submitted surveys with 5 individual’s names on a survey but not all

of the individuals have PPI scores on the Internet and their names are
not listed in the table of registered individuals?
Answer: A Reference List must be submitted along with surveys in
order for an individual/company to have a PPI score. Simply
including an individual’s name on a reference list does not create a
PPI score for that individual. All individuals must have a separate
reference list submitted in their name.

4. If I am an engineer, can I submit a past project that has not been

constructed yet?
Answer: No. Projects that have not been constructed will not be
counted. All past projects must have construction completed.

5. How do I get my internet code?

Answer: Your online code which allows you to view your PPI score
can be obtained by using the following link:
http://www.pbsrg.com/pips/code_req_az.htm

6. How do I improve my PPI scores?

Answer: Submit additional surveys which indicate you are a high
performing individual or firm. You must also submit a new
Reference List

240
241
7. How do I get a copy of my past performance score?
Please see Section 8.3 of this attachment for a complete list of
information available on the website

8. Our firm submitted 30 references and surveys how do you choose

which 25 are counted?
Answer: All thirty surveys are counted in your PPI score. All
returned surveys (in the proper format) are counted in the PPI
Score. No surveys are deleted. See Section 7.3 of this
attachment.

9. If an individual changes firms, does their PPI score follow them?

Answer: Yes, if an individual switches employers their PPI score
does follow them. The individual does not have to resubmit
surveys or a Reference List. We ask that anyone changing
employers please complete the following form and return it to the
fax number indicated on the form: http://pbsrg.com/pips/ppi-
database-az/employer-change.doc

10. Is it better to get 20 surveys with 8 ratings, or 3 surveys with 10

ratings?
Answer: There is no way to know since this is dependent on every
client and all other vendors/individuals competing on a project. For
example, if all other vendors competing on a project have 20
surveys with 8 ratings, then it may be better to get more surveys.
However, keep in mind that all criteria are weighted and that most
clients also look at other criteria besides PPI.

11. How many surveys should I turn in?

Answer: As many highly rated surveys as possible.

12. How will the owner remember the job if it was done a long time ago?
Answer: Simply ask the past client if they remember the job and if
they would complete a survey on your behalf. The vendor may
need to provide proof to the client that they completed the project.

13. What if nobody can answer the survey?

Answer: If nobody is capable of filling out a survey for a particular
job then find a different past client to survey.

14. What if the contact moved jobs, can I still get him to evaluate me?
Answer: Yes. However, the PBSRG may verify this information.
Also, the past client cannot work for the current vendor (to prevent
any conflict of interest).

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15. Do I have to send multiple surveys to the same client (for each
different job)?
Answer: Yes. Every different job requires a different survey.

16. Can I send multiple surveys to a client (just in case they don’t like the
Site Superintendant or Civil Engineer)?
Answer: Yes, you can send out multiple surveys if you would like to.
It is up to you to determine how you want to survey past clients.
We suggest including all critical personnel on one survey in order to
minimize the amount of effort put forth by your past clients.

17. Do the past projects have to be specific or similar to this project?

Answer: Past projects do not have to be similar to the current
project.

18. Are you evaluating the size of the project?

Answer: The project size is not evaluated in the PPI Process.
However, this information may be reviewed in other steps of the
Best-Value selection process (such as the interviews).

19. How can we delete bad scores?

Answer: The only way to delete bad scores is by deleting a
firm/individual’s entire database and start over by submitting a new
reference list and surveys. See Section 2.0 of this attachment.

20. Do we get more credit for projects that are similar?

Answer: More credit is not given for similar projects. However,
during the interviews questions about similar experience may be
asked.

21. What if I don’t get any surveys?

Answer: If no surveys are turned in than you will be given credit for
one survey and an average rating of 5.

22. Is this going to take too much time and effort?

Answer: The PPI process is a onetime process. Once the process
is complete a vendor or individual never needs to repeat it. The
information is stored in a database and accessed on any future
proposals. The vendor/individual may also elect to not do the PPI
process (in which case they will be given credit for 1 returned
survey and an average rating of 5).

23. Are we going to get reimbursed if we don’t get the award?

243
 Answer: No.

24. Can we submit a project that is substantially complete?

Answer: No.

25. Can we list multiple PM’s on a survey if we had more than one PM
work on a past project?
Answer: No. You can only list one individual per area on a single
project. If you had multiple PM’s work on a project, you must pick
one PM that will be given full credit.

26. Can we Email surveys to past clients?

Answer: Yes, you can email the surveys, but the survey must be
returned with a signature and date (from the past client). All
surveys must be submitted as part of your proposal in hardcopy
(the Universities will not accept electronic surveys).

27. What if we are a sub consultant and the building owner may not know
that we worked on their past project?
Answer: Contact the client and let them know that you worked on
the project. You may need to provide evidence that you worked on
the project. You may also list the main consultant (who contracted
with the client) and list your firm as a sub-consultant on the survey
form. However, the survey form must have the firms/individuals
name on it to receive credit.

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ATTACHMENT 3 – PROPOSAL FORM

This form must be completed and stapled to the Risk Assessment and
Value Added Plan and the Milestone Schedule as part of your submittal.

VENDOR INFORMATION

1. Your firm has read and will comply with all items
listed in Arizona State University RFP 080909 if Yes No
awarded this contract?

RAVA Plan Checklist:

The RAVA Plan is stapled to this form.
The RAVA Plan is 3 pages or less and is in the required format.
The RAVA Plan does NOT contain any names, past projects, or
information that may identify the contractor or critical team members.

Service Proposal
The Service Proposal is stapled to this form.
The Service Proposal is 2 pages or less and is in the required format.
The Service Proposal does NOT contain any names, past projects, or
information that may identify the contractor or critical team members.

PPI – Vendor Checklist:

Surveys have been distributed to the past/current clients on the
reference lists.
All reference lists have been included in submittal package.
The surveys have been completed and are included as part of the
proposer’s submittal package.

Name of Company

Printed Name of Firm Signature of Firm Representative

Representative

Phone Fax Date

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ATTACHMENT 4 – PRE-PLANNING AND QUALITY CONTROL PERIOD

The pre-planning period follows the prioritization of the best value

vendors. The preplanning period starts with a preplanning kickoff
meeting, and ends with a final presentation before the award of the
contract. During the preplanning period, the best value vendor is to
perform the following tasks. Only the potential best value vendors are
required to adhere to the following requirements.

A) Create a quality control plan from the following documents:

1. RAVA plan.
2. Lists of other risks identified by other vendors.
3. Concerns of the client (user and project manager.)
4. Scope/Specification and requirements.
5. Interview minutes.
6. Other discussion during the preplanning period.

The format of the quality control plan will be:

1. Detailed Project Scope, identifying areas of uncertainty or that lack

clarity.
2. Risk Minimization Plan that clearly differentiates risks the vendor
does not control and how those risks will be mitigated. The plan
should be in a simple format such as:
a. Risk.
b. Plan to minimize risk for those risks the vendor does not control.
c. Risk/Cost to the Universities
3. Client action item list with item/action need, date required, who in
the client organization is responsible, that persons contact info, and
impact if requirement is not met (in $, days, etc.)
4. Schedule with critical milestones and client action items.
5. List of Client accepted value added items as proposed in the bid
RAVA Plan.

B) Create a quality assurance checklist, which will be checked weekly by

the vendor, signed, and delivered to the client’s project manager. The
checklist is to consist of the risk as identified in the Risk Minimization plan,
in abbreviated format, with checkboxes next to each risk.

Objective of Preplanning Period

The vendor is responsible for:

246
1. Identifying items that cannot be completed
2. Give recommendations
3. Coordinate all aspects of the project

Preplanning Final Meeting

The following actions will be conducted in the final meeting:

1. Vendor presents to University Project Management Team a completed

Quality Control Plan and Quality Assurance Checklist.
2. Vendor provides a PowerPoint presentation detailing and summarizing
the results of the Pre-Planning Period
3. ASU Project Manager approves the Plan and the Checklist

Weekly Report

The best value vendor will fill out a bi-weekly report throughout the life of
the project that will list items which may cause the time, cost, or quality to
change. Details on the bi-weekly reporting system are given following the
pre-planning period checklists below.

Preplanning Period / Preplanning Meeting Checklist

Preplanning Period Activities:

Before the Final Preplanning Meeting, the potential best value vendors
must complete the following activities:

Create a detailed schedule of the entire project illustrating critical

tasks, risk and decision milestones.
Coordinate the project with all the critical participants (project
manager, subconsultants, subcontractors, equipment suppliers, etc)
during preplanning period, to make sure there are no issues with the
requirements, costs, or delivery schedules.
Clarify any open issues (that do not have a date and identified
accountable person) or concerns with responsible parties.
Coordinate the project with all ASU representatives (list out pertinent
ASU reps and other critical groups (i.e. local gov, permitting, etc) and
their requirements). Ensure that the vendor can meet their
requirements.
Identify any action items needed from the Universities. This includes
the client Project Manager, Facility Manager, and any other pertinent
personnel. Each item should have a due date of when the vendor

247
 needs a response and an individual assigned to each item.

Prepare list of suggestions to the Project Manager on how the vendor

can make the project more efficient. Gain approval prior to
Preplanning Meeting.
Coordinate any value added items from the RAVA Plan.
Review interview statements.
Review and minimize any additional risk issues.
Prepare the Quality Control Plan
Prepare the Quality Assurance Checklist
Prepare the Preplanning Meeting Power Point presentation (see
below)
Prepare the Preplanning Document (see below)

Preplanning Meeting Presentation:

At the preplanning meeting, the vendor will give a presentation to address

the following:

Detailed schedule of the entire project with critical risk milestones

including University action items.
List of University action items with due dates.
Respond to any questions from any University representatives
(minimal.)
Review of additional risk items and plan to minimize the risks. This
should include impact on cost, schedule, and “what ifs” at critical
points in the project.
Review the approved list of value added items.
Identification of how the vendor will manage the project. Show how
the vendor will minimize ASU’s need to make decisions, control, or
manage the project.
Review the Quality Control Plan / Quality Assurance Checklist

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Preplanning Document

To be considered responsive, the potential best-valued vendors must

submit this document along with the attachments identified below, before
the award can be made:

Please attach the following documents:

Vendor’s original Proposal Form

Vendor’s original RAVA Plan
Vendor’s interview statements
Additional risks identified by other vendors and the client
A completed and signed Preplanning Period Checklist
Preplanning presentation slides
Preplanning meeting minutes
Quality Control Plan
Quality Assurance Checklist

The Quality Control Plan must include the following:

Detailed project schedule

Detailed list of client action items with individuals, dates, and
repercussions assigned to each action item
Detailed list of all risks (identified by the vendor, and other parties)
and action or solution to minimize all risks. Risk the vendor does not
control should be clearly delineated.

Name of Company

Printed Name of Firm Signature of Firm Representative

Representative

249
Risk and Performance Reporting System Summary

Overview

The risk and performance reporting system is a companion to the quality

control (QC) program that is created by the best value Suppliers during
the pre-planning phase. All unforeseen events or scope changes should
be identified by the Vendor with a way to minimize the risk(s) (minimize
the cost and time impact). The risk and performance report should be
minimal, if the QC/QA was done properly by the Vendor during the pre-
planning phase.

Further details about the implementation of the Risk and Performance

Reporting Systems will be covered during the Pre-Award period.

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ATTACHMENT 5 – VENDOR SUBMITTAL FORMS

PROPOSER SUBMITTAL CHECKLIST

Included? Submittal
Mandatory certifications and Substitute W-9 as per Section
XII
Risk Assessment and Value Added Plan (RAVA Plan)
• RAVA: no longer than two (2) pages
• Transition Milestone Plan: one (1) page
Service Proposal
Financial Proposal
Past Performance Information
• Company Reference List (hardcopy and CD)
• Separate Individual Reference Lists (hardcopy and
CD)
• Hardcopies of all returned client surveys
Financial Statements
Exceptions to Terms and Conditions

251
 RISK ASSESSMENT TEMPLATE
This template must be used.

Please prioritize the risks (list the greatest risks first). You may add/delete
the risk tables below as necessary. (Font to be no smaller than size 10)

Risk 1:
Solution:

Risk 2:
Solution:

Risk 3:
Solution:

Risk 4:
Solution:

Risk 5:
Solution:

Risk 6:
Solution:

Risk 7:
Solution:

Risk 8
Solution:

Risk 9:
Solution:

252
 VALUE ADDED PLAN TEMPLATE
This template must be used.

Vendors should identify any value added options or differentials that they
are proposing, and include a short description of how it adds value to the
project/the Universities. Identify if the items will increase or decrease
schedule, financial consideration, or expectations. You may add/delete
the value tables below as necessary.

Item 1:
Impact:

Item 2:
Impact:

Item 3:
Impact:

253
 Furniture Project Performance Questionnaire

Code <<Code>>
<<Name of
To: Phone: <<Contact Phone>>
Evaluator>>
Fax: <<Contact Fax>>
Subject: Past <<Name of Company>>
(Name of Company Being Surveyed)
<<Name of Any Individuals>>
(Name of Individuals Being Surveyed)

The PBSRG is a research group at Arizona State University that collects

past performance information on vendors and key personnel to assist
clients in awarding projects based on value. The firm/individual listed
above has listed you as a reference for a past project they have
completed. We would greatly appreciate it if you would take a few
moments to complete this survey. Please rate each of the criteria on a
scale of 1 to 10, with 10 representing that you were very satisfied and 1
representing that you were very unsatisfied. Please rate each of the
criteria to the best of your knowledge. If you do not have sufficient
knowledge in a particular area, please leave it blank.

Client <<Client Work Was Performed Date <<Date>>

Project For>>
Name: <<Project Name>> Completed:

N RATIN
CRITERIA UNIT
O G
Ability to maintain the project cost (minimize (1-
1
change orders) 10)
Ability to maintain project schedule (complete on- (1-
2
time or early) 10)
(1-
3 Quality of service
10)
(1-
4 Professionalism and ability to manage
10)
(1-
5 Close out process
10)
Communication, explanation of risk, and (1-
6
documentation 10)
Ability to follow the users rules, regulations, and (1-
7
requirements 10)
Overall performance and comfort level in (1-
8
hiring again 10)
9 How well did the final product(s) match your (1-
254
 initial expectations? 10)
Are you satisfied with the company /
10 Circle Y / N
individual(s)?
Installation is complete and final payment
11 Circle Y / N
has been made?

Printed Name (of Evaluator) Signature (of Evaluator)

Thank you for your time and effort.

Please fax the completed survey to

255
 APPENDIX E

RFP 080909 ADDENDUM AND CLARIFICATION

256
 Request for Proposal 080909
Tri-University Furniture Contract

Addendum 1
March 17, 2009

Clarifications:

Past Performance Information

Attachment 2, Section 3.11 should read: The maximum number of past

projects that will be given credit for is 10 (ten) for each individual. The
minimum number of past projects that will be given credit for is 1 (one) for
each component.

We have requested that proposers collect information for: Manufacturer’s

Representative, Dealer’s Representative, Lead Designer and Lead
Installer. These positions may not accurately reflect your proposed
structure. For instance, a Proposer may have separate designers that
would work with the individual Universities or it may be a manufacturer
proposing direct with no dealer representative involved. Any deviances
should be listed out in your proposal.

PPI is only required for primary manufacturer, not all manufacturers

proposed as additional products.

PPI is required for submittals for the Primary Budget award.

You may collect past performance information from members of the

evaluation committee.

Risk Assessment and Value Added (RAVA) Plan

Section IX.2.b states - The RAVA Plan contains three sections: 1) Risk
Assessment, 2) Value Added Differentiation, and 3) Transition Milestone
Plan. The Risk Assessment and Value Added Differentiation sections
must not exceed a combined length of two (2) pages. The Transition
Milestone Plan must not exceed one (1) page in length.

257
Proposers may allocate the Risk Assessment and Value Added
Differentiation in any manner they like, not to exceed 2 pages. Proposers
are not required to have 10 items on the Risk Assessment section and 3
items of Value Added Differentiation. Proposers do not need to have one
complete page of Risk Assessment and one complete page of Value
Added items. These may be addressed as proposers see fit.

Questions:

1. Please give more detail on what you are looking for on the
Transition Milestone Plan.

The Transition Milestone Plan should identify key action steps and
milestone dates for transition to the new contract. Proposers shall
provide the steps they plan to take to be fully ready to provide all
services to all Universities by July 1, 2009.

2. Is there a preferred format to the Transition Milestone plan?

No.

3. How do proposers submit proposals if they choose to submit for

more than one award category?

Proposers may submit one package for multiple award categories if

RAVA plan, Transition Milestone plan, Service Proposal and key
account individuals are all the same. The following revised
Financial Proposal allows for designation of award category.
Proposers should submit separate packages if there are any
changes to the evaluation criteria submittals. PPI information only
needs to be gathered and submitted once per individual.

4. Supplier Sustainability Questionnaire – should it be filled out by

main vendor, distributor or both?

Sustainability questionnaire should be filled out by proposer of

record. The questionnaire provides the ability to provide
information for distributor and manufacturer policies.

5. Form of Proposal – should there be a tab for additional

environmental information as requested in Section VI and e-
commerce information as requested in Section V?

258
 We anticipate that proposers will be able to meet all of the
requirements outlined in the request for proposal. Exceptions
should be noted in proposal response Section 7. Specific program
details will be discussed with successful proposers upon contract
pre-award.

6. Can you clarify what determines whether a project is a capital

project?

Capital projects are those projects handled by our Capital

Programs Management Group. The furniture budget of those
projects varies based on the type of building being constructed.
There is no minimum or maximum dollar amount that puts the
furniture purchase into a ‘capital project’ category.

Sincerely,

Liz Chandler

Liz Chandler, C.P.M.

Purchasing Manager

Tempe Campus

PURCHASING and BUSINESS SERVICES

P.O. Box 875212, Tempe, AZ 85287-5212

259
SECTION VIII – FINANCIAL PROPOSAL

List each product line you are offering for this contract. List all values as
percentages. The “Install / Delivery” and “Design” categories must be
expressed as a percentage of the product cost, designated as List or Net.
Submit a MS Excel (XLS) version of your financial proposal. You must
use the format in the “Contract Pricing Proposal” table below.

ASU RFP 080909 Tri-University Furniture Contract Pricing Proposal

Proposer:

Award
Category:

Manufacturer:

Price List:
Discount off
Line List Install / Delivery Design

260
Additional information requested for RFP 080909 – Tri University
Furniture Contract

Please send all written correspondence to Jake Smithwick,

jake.smithwick@asu.edu. The information must be submitted by Friday,
6/5/09, 5:00PM.

1. Main office furniture provider – provide complete specification and

pricing guides for all lines proposed from the primary furniture
manufacturer. Please deliver one set to each University.

ASU Purchasing – Attn: Liz Chandler

1551 S. Rural Rd.
Tempe, AZ 85281

NAU Purchasing Services – Attn: Carol Luckey

1415 S. San Francisco
Flagstaff, AZ 86011

UofA Contracting and Purchasing – Attn: Ted Nasser

220 W. 6th Street, 5th Floor
Tucson, AZ 85701

2. Provide further information about how your proposal, including

primary furniture line and supplemental products, will meet the
following. If an area or type is not covered, indicate as “N/A”.

1. Classroom - tablet arm chairs, lecterns, instruction tables,

stacking chairs, task chairs, etc.
2. Training Tables - Plug & play and ganging capability, etc.
3. Conference Tables
4. Lounge Furniture - Lobbies, Libraries, Lounge/Study Areas and
Residence Halls
5. Outdoor Furniture - Benches, waste receptacles, tables and
chairs
6. Compact Shelving, Bookcases and shelving, Electronic
Equipment Rack systems
7. Office Accessories - clocks, hooks & racks, planters, trash,
carts, etc
8. Fixed Seating

3. Provide pricing for the attached typicals. There are two Excel files
attached, and each excel file contains two separate tabs: “Primary
Award” and “Budget Award”. The vendor should fill out the tab(s)

261
for which they are proposing. If the vendor is proposing on both the
Primary and Budget Awards, they must fill out both tabs in each
Excel file.

The “Installation” and “Design” fees should be actual costs for the
given typical. Include a brief explanation of how it was calculated
as it corresponds to your original proposal.

For the given typical, the vendor should provide “Lowest”, “Mid-
range”, and “Highest” system cost solutions. If the vendor does not
have differentiated system cost options for all three categories, then
the vendor should just fill in those categories that they do have
available for this contract.

The vendor is requested to submit costing for both the Tri-

University and State of Arizona furniture contracts. If a vendor
does not have a State contract, then this table should be left blank.
There is no penalty if the vendor is not on, or does not have, a state
contract.

262
 APPENDIX F

BEST VALUE INTERVIEW QUESTIONS

263
 Manufacturer Interview Questions Sheet

Interviewee Name (Dealer / Manufacturer) – Date

A performance-based individual has the following characteristics:

• Responds quickly and without hesitation to any technical or
potential problem area.
• Provides short, non-technical answers.
• Minimizes the amount of work needed by the user.
• Is able to prioritize risk.
• Has a plan for each type of risk foreseen.
• Understands that it is part of the job to minimize political risk, risk
that is not related to the furnishing services performance.
• Demonstrates an extensive knowledge of the service to be
provided, as if they have already done it.

1. Draw out and explain your involvement in a typical project. Show key
steps, approximate time.

a. What and where are the key risks you don’t control and what will
you do to minimize them?

b. What do you need from the client and when?

2. What are the main risks in working with _________________ (dealer

name) and how will you minimize those risks?

3. Do you currently document your performance and risks? If so, how do

you document it?

a. Are you comfortable with documenting performance and

risk?

4. How will you ensure that you remain knowledgeable about new
products, technology, research, etc., that are being developed by your
company? How do you ensure that the dealer incorporates your latest
technological advances?

5. What percentage of the Primary line is available on the

Express/Expedited program?

6. What are the lead-times for standard product, product on the Express
program, and specials/custom from the time of order entry to delivery?
264
7. Can manufacturing time be reserved for projects, and if so what would
be the necessary steps to obtain a reservation?

8. How would a multi-floor, multi-phase project be handled to ensure the

product arrived at the correct time?

9. How do you ensure the end user receives your product as intended
and on-time?

10. The needs of the end-user have changed, or a new user is assigned
after product has been ordered. Could the Universities return new and
unused products to the manufacturer?

265
 Dealer Interview Questions Sheet

Interviewee Name (Dealer / Manufacturer) – Date

A performance-based individual has the following characteristics:

• Responds quickly and without hesitation to any technical or
potential problem area.
• Provides short, non-technical answers.
• Minimizes the amount of work needed by the user.
• Is able to prioritize risk.
• Has a plan for each type of risk foreseen.
• Understands that it is part of the job to minimize political risk, risk
that is not related to the furnishing services performance.
• Gives the impression that he or she has already implemented and
operated the service.

1. Why were you selected for this contract?

2. How many similar clients have you worked with in terms of # of

projects? Describe one contract w/ multiple projects.

3. Draw out and discuss the typical project. Show key steps,
approximate time.

a. What and where are the key risks you don’t control and what will
you do to minimize them?

b. What do you need from the client and when?

4. What are the main risks in working with _________________

(manufacturer name) and how will you minimize those risks?

5. On capital projects, what steps can you take to ensure that you are
integrated at the beginning of the project to coordinate with the
architect, designer & other construction components?

6. Do you currently document your performance? If so, how do you

document it?

a. Are you comfortable with documenting performance and

risk?

266
7. You have a project where the outside interior designer has shown the
end-users high-end products that they love and want but cannot afford.
How will you ensure the end-user is happy at the end of the project?

8. How would a multi-floor, multi-phase project be handled to ensure the

product arrived at the correct time?

9. The needs of the end-user have changed, or a new user is assigned

after product has been ordered. Could the Universities return new and
unused products to the manufacturer?

10. How will you ensure that you are incorporating your manufacturer’s
latest technological advances?

11. NAU has consistently had to pay an additional cost for trip charges, per
diem, lodging, travel, weekly/monthly service trips, etc. Will your
dealership assess any additional costs for service to NAU or UofA?

12. What city are you based out of, and describe how you intend to provide
full service to each university?

267
 APPENDIX G

EVALUATION COMMITTEE TRAINING SLIDES

268
269
270
271
 APPENDIX H

EVALUATOR RATING FORMS

272
RAVA Plan Rating Sheet

Instructions:
The Risk Assessment and Value Added plan should not contain any
names or products that may be used to identify who the vendor is. Criteria
are rated on a scale of 1-10, with 10 being the best and 1 being the worst.
All plans should start from an average (or 5 rating) and go up and down
depending on the relative value. If a plan stands out it should get a 10. If
none of them seem any different, they should all get an average score of
5. If a plan is so bad that the rater feels like they should not get the
project, they should be rated a 1.

Teams
NO CRITERIA A B C D E F G
Risk Assessment Evaluation
1 (Ability to identify and minimize
potential risk unique to this project)
Value Added Option Evaluation
2 (Ability to add value to the project in
terms of time, money, or quality)
3 Transition Milestone Plan Evaluation

4 Overall RAVA Plan Rating

Teams
NO CRITERIA H J K L M P R S
Risk Assessment Evaluation
1 (Ability to identify and minimize
potential risk unique to this project)
Value Added Option Evaluation
2 (Ability to add value to the project in
terms of time, money, or quality)
3 Transition Milestone Plan Evaluation

4 Overall RAVA Plan Rating

By signing your name below, you state that you have based your scores
on the contents of each RAVA plan and that you have had no prior
knowledge of any plan and whom they belong too. You further agree that
there is no collusion or conflict of interest between yourself and any other
party involved.

Printed Name Signature Date

273
Service Proposal Rating Sheet

Instructions:
The service proposal should not contain any names or products that may
be used to identify who the vendor is. Criteria are rated on a scale of 1-
10, with 10 being the best and 1 being the worst. All proposals should
start from an average (or 5 rating) and go up and down depending on the
relative value. If a proposal stands out it should get a 10. If none of them
seem any different, they should all get an average score of 5. If a
proposal is so bad that the rater feels like they should not get the project,
they should be rated a 1.

Teams
NO CRITERIA A B C D E F G
Service Proposal
1 (outline of services, what will transpire,
capability of proposer)

Teams
NO CRITERIA H J K L M P R S
Service Proposal
1 (outline of services, what will
transpire, capability of proposer)

By signing your name below, you state that you have based your scores
on the contents of each Service Proposal and that you have had no prior
knowledge of any proposal and whom they belong too. You further agree
that there is no collusion or conflict of interest between yourself and any
other party involved.

Printed Name Signature Date

274
Interview Rating Sheet

OVERVIEW AND INSTRUCTIONS

A standard set of questions will be asked to each firm. The rating
committee reserves the right to ask for clarification on any question or
response to a question. All individuals must be interviewed separately,
and no other individuals (from the vendors group) can be present. The
committee is encouraged to take notes because no rating will take place
until all interviews are complete. The final objective is to assign a
numerical score (1-10) for each Key Component. The scores must be
done individually and should not be done on a group consensus. Once
the scores are complete, they will be averaged together to get an overall
team score. The interviews should be rated comparatively to one another.
If there is an individual that stands out from the rest, you should give them
a higher score (10). If there is an individual that you do not want on this
project, you should give them a low score (1). If the interviews are all
about the same, then you should give them all the same ratings (5). Do
not feel obligated to rank the teams if there is no difference. If a firm has
multiple individuals assigned to the same Key Component, provide an
overall rating for that firm’s Key Component.

PRIMARY Award Teams

KEY
NO COMPONENT Firm A Firm B Firm F Firm H Firm P Firm S
Manufacturer’s
1
Rep.
2 Dealer’s Rep.

BUDGET Award Teams

NO KEY COMPONENT Firm A Firm F Firm K Firm L Firm R
1 Manufacturer’s Rep.

2 Dealer’s Rep.

By signing your name below, you state that you have based your scores
on the contents of each Interview. You further agree that there is no
collusion or conflict of interest between yourself and any other party
involved.

Printed Name Signature Date

275